Tatton Asset Management (TAM) has seen its pre-tax profits rise 454% as chief executive Paul Hogarth confirms M&A plans are underway.
Pre-tax profits for the group were up to £3.08m for the six months to 30 September 2018, a significant increase from £560,000 for the same period last year. Group revenue increased 15.7% to £8.45m, up from £7.3m in 2017.
TAM, which includes discretionary manager arm Tatton Investment Management, IFA adviser support service Paradigm Partners and mortgage distributor Paradigm Mortgages, saw assets increase across the group.
Tatton Investment Management saw assets increase 30% to £5.7bn, up from £4.4bn in 2017. Revenue was also up 45% to £4.03m and operating profit grew 60% to £2.05m.
The result statement said: “The strategy for TIML remains to be the DFM provider of choice for the IFA community. The platform agnostic approach of our discretionary portfolio management service as a centralised investment proposition continues to resonate with financial advisers as they seek to grow and expand their businesses.”
Additionally, Tatton Investment Management increased its member firms by 41.6% to 405, up from 285 in 2017, and number of accounts by 21.5% to 53,500.
Growth in assets from new firms over the past calendar year was 81.5%, accounting for more than £1.2bn AUM.
M&A Activity
During the same results last year, Tatton AM said it was eyeing M&A options after positing solid AUM growth for the six months to the end of September 2017.
In June this year, Hogarth said the £51.6m raised from the IPO would be used to fund a potential takeover.
Speaking to Portfolio Adviser, Hogarth said discussions were underway, but the group does not have a time scale as it is not under any pressure to spend the money raised in the IPO.
“When we look at the Tatton business in particular, the investment manager piece, we would be very interested in buying smaller fund management operations, possibly smaller discretionary fund managers or asset managers and that probably would be our targets.
“We’ve got a few conversations underway but nothing that we can be specific about at this stage, but that’s certainly an area we’re looking at.”
He added: “On the Paradigm partner piece, we’d be interested in purchasing another IFA support services business if we saw the right target.
“On the mortgage side, we could increase our position and go in to more manufacturing in other areas that would support the mortgage event.”
Paradigm Partners
The number of new firms under Paradigm Partners grew 7.3% to 382, up slightly from 356 in 2017.
However, year on year revenue was down 10.3% to £3.12m from £3.48m and operating profit reduced 14.4% to £1.54m from £1.8m.
The firm said this period has been a transition post the IPO and it is expected to return to growth following a rebrand of the business in early 2019.
Hogarth said: “We have delivered a positive first half with continued growth in revenue, profit and earnings underlining the strong demand by independent financial advisers for our low-cost discretionary fund management service for the mass affluent.
“This is particularly reflected in the strong growth of our assets under management and in the increasing number of IFAs and clients we are working with.”
