AJ Bell confirmed plans to list 25% of its share capital on the London Stock Exchange (LSE) next month as Nucleus announced it has signed a deal with tech provider Bravura Solutions.
The Nucleus deal will see it gain direct access to the Sonata technology underpinning the platform.
The platform’s access to the tech provider has been through an outsourcing agreement with Openwealth until now but, the new long-term deal will ensure it has a direct contractual agreement.
Removing an ‘unnecessary hurdle’
Research by Platforum revealed that advisers’ overall satisfaction with their primary platform remains flat year-on-year at 80%, despite recent technology upgrade issues.
Nucleus said this deal, alongside recent recruitment in its tech team, will improve the control it has over its technology and enable the platform to accelerate the rate of product development for its users.
It said this would in turn, help the firm drive future inflows and assets under administration growth.
Clive Waller, managing director at CWC Research said the deal makes total sense, stating the existing situation, whereby Nucleus goes via Genpact to get to Bravura, was an “unnecessary hurdle”.
Last month, Nucleus recorded £282m of positive net flows in Q3 18, however this was down 10% from the £315m in the previous quarter. Compared with the first quarter (£411m), net flows were nearly a third lower.
Waller said: “Markets are toppy and nervous. Why Transact are attracting more than Nucleus in one period is irrelevant. Should it continue over a year or two, it would matter.”
David Ferguson (pictured), founder and chief executive of Nucleus, added: “We expect the long-planned unbundling of the current outsourced technology and BPO services and direct relationship with Bravura to materially strengthen our technology foundations and create optionality in our future organisational design and ultimately support our plans to deliver further margin expansion.”
AJ Bell IPO will deliver founder well-deserved windfall
Elsewhere, AJ Bell said 25% of its share capital will be floated when it lists next month.
Waller said: “Given the success of the platform it makes total sense to list, providing new capital, and giving Andy Bell well deserved financial reward should he choose to take advantage.”
As part of the initial public offering (IPO), qualifying AJ Bell customers will be able to apply for shares via the investment platform. The minimum application size in the offer will be £1,000.
According to the platform’s update, it said selling shareholders will only be able to sell their existing shares.
AJ Bell directors and other employees selling shares will be subject to a one year lock-in of 100% of their shares, following the date of admission, falling to 50% for another year thereafter, it added.
Additionally, key shareholders Invesco Perpetual and Seneca Investment Managers will be subject to a 180 day lock-in period following the date of admission, in respect of their shareholdings at admission.
The firm said the move will provide liquidity for the selling shareholders, enabling them to realise part of their investment in the company.
Meanwhile, AJ Bell has engaged Numis Securities Limited to act as sponsor, financial adviser, sole bookrunner and broker.
According to the update, the company said the indicative price range and the maximum number of shares to be sold will be determined “in due course” and contained in its prospectus, which should be published “in the coming weeks”.
