M&G’s acquisition of Ascentric has been described as mutually beneficial for both businesses and is expected to solve the fund group’s distribution problem in the advised space.
Royal London confirmed on Wednesday it had sold Ascentric to M&G following a “comprehensive strategic review” of its platform business by chief executive Barry O’Dwyer.
The deal, subject to regulatory approval, sees M&G acquire £14bn worth of assets under administration that Ascentric looks after for its 90,000 underlying customers. Currently around 1,500 advisers use the digital wrap and wealth management platform.
It also marks the end of an era for Royal London which had steered Ascentric through a thorny replatforming process that cost the life insurance and investment group over £100m in the last three years.
Positive outcome for Ascentric
Langcat consultant Mike Barrett described the news as a “positive outcome” for Ascentric.
Question marks over Ascentric’s fate following reports that Royal London had put its advised platform up for sale had been costing the platform business with advisers who would have otherwise used its services, Barrett said.
But now “not only is the uncertainty gone but the people who have actually bought them appear to be a really good fit.”
Buying Ascentric solves M&G’s distribution problem
Fundscape CEO Bella Caridade‐Ferreira said the move will help M&G play catch up with other fund groups that have established adviser platforms.
“Prudential has a good reputation and its own platform to distribute its own products, but it was late to the game in terms of an adviser platform with all the bells and whistles,” Caridade-Ferreira said. “Buying Ascentric solves their problem.”
Barrett agrees the main attraction behind the deal for M&G is leveraging its existing distribution capabilities in the advised space. While its range of multi-asset Pru funds is “very, very popular with advisers” the asset manager did not have an all encompassing financial planning service for advisers.
“That’s where the attraction of owning a platform lies,” said Barrett. “They can start to bring all of that together for an adviser to sit down and present one overall financial plan to their clients.”
‘I don’t know why M&G is a better fit than Royal London’
But CWC Research managing director Clive Waller noted the timing of the sale is curious given Royal London spent over £100m on Ascentric’s replatforming. “I don’t know why M&G/Pru is a better fit than Royal London”.
Waller said M&G has been “hot and a little less hot on having a platform for over 15 years”. He notes Prudential sold its Fundsdirect platform business to Hugo Thorman which would eventually become Ascentric.
“It is ironic that they have acquired the very one they started out with but sold,” he said.
“My only concern is that so much indecision for such an extended period leaves a slight doubt about the will behind any future strategy. Let’s hope such doubts are ill-founded.”
