Martin Gilbert’s Assetco has reached an agreement with private equity firm Preservation Capital Partners to acquire a 30% stake in adviser platform Parmenion Capital Partners.
The firm announced on Thursday the cash deal will be for £27.8m, with £20.6m due on completion and up to £3.6m due in March 2022 and March 2023.
The deal is subject to Financial Conduct Authority approval, which is expected to occur by the end of September.
Assetco said it intends to fund the initial consideration from internal cash resources and marketable securities currently held, totalling £31.6m. On Monday, Portfolio Adviser reported how Assetco is seeking to strike more deals thanks to a £31m windfall from successfully suing its former auditor, Grant Thornton.
The announcement came just hours after Standard Life Aberdeen announced the completion of the sale of Parmenion to Preservation Capital Partners for £102m, a deal first announced in March.
SLA chief executive Stephen Bird said: “The completion of the sale of Parmenion is a step forward in simplifying our business and delivering on our strategy.”
Bristol-headquartered Parmenion was acquired by Aberdeen Asset Management in January 2016 while Gilbert (pictured) was chief executive and became part of SLA following the merger of Aberdeen and Standard Life in 2017.
Fundscape chief executive Bella Caridade-Ferreira described the deal as a “really interesting” move.
She added: “I think Martin Gilbert always preferred Parmenion to Wrap and Elevate – mainly because he bought Parmenion when he was CEO of Aberdeen , before the SLA merger. I suspect he finds it more fintech, unburdened by life company legacy and more scalable than either of the other two Standard Life platforms.”
Similarly, CWC Research managing director Clive Waller said the deal was not a total surprise given “Martin Gilbert was a big fan of Parmenion when he was boss of Aberdeen”.
Parmenion services around 1,100 adviser firms and 2,600 financial advisers with £9bn in assets under management. It was founded in 2007 and employs 211 people.
For the financial year ended 31 December 2020, Parmenion reported revenue of £29.8m and an operating profit of £1m. As at 31 December 2020, it had net assets of £10.8m and £15.9m of cash on the balance sheet.
‘Market-leading investment platform’
Assetco deputy chairman and chief executive Peter McKellar described Parmenion as “a market leading investment and advisory platform”.
He added: “Our strategy is to position Assetco to take advantage of the structural shifts taking place within the asset and wealth management industry, such as the increasing use of technology to help individual investors and their advisers. It is intended that this will be achieved through the acquisition, primarily, of majority stakes in selected businesses which play into these structural shifts and supported by strong distribution to drive organic growth.
“Few businesses will divert us from this approach, but we were compelled by Parmenion’s market positioning, strong growth potential and excellent management team and on this occasion we are delighted to have secured a significant minority interest in conjunction with Preservation Capital Partners.”
Gordon Neilly, an adviser to Assetco and former global head of strategy and corporate development at SLA, is expected to join the board of Parmenion after completion of the deal.