An old Stock Exchange adage was “sell in May and go away, come back on St Leger’s Day” (which is in September, as anyone with an interest in horse racing will know) – and this was probably sound advice when all trading was conducted face to face on the Stock Exchange floor, pre ‘Big Bang’ in 1986. As people drifted away for the summer, volumes would have dropped and prices drifted downwards.
There is no real evidence that this adage still holds true and it does not take too much imagination to see why. Other than some pretty remote areas, trading can be conducted almost anywhere in the world. Much trading is algorithmically driven and computers don’t take holidays.
We carefully monitor deal announcements in UK financial services M&A (and have built the technology that identifies any unannounced transactions) and see no conclusive evidence of seasonal fluctuations.
Unlike trading shares in quoted companies that can be effected in seconds, private company deals in financial services, with the requirement to get FCA approval, typically take 6 to 12 months, from start to finish. Consequently, deal announcements do not reflect deal commencements.
Historically we have steered our clients away from actively launching a sale process during July or August, on the basis that it may not be possible to reach out to all the key decision makers at the respective buyers. But as remote working, video conferencing and increasing connectivity – where Covid has of course greatly accelerated the uptake – has rather eroded the “sanctity” of being on holiday and, as such, this is no longer our advice.
We will now send out Information Memoranda as a matter of course during August, knowing they will be received and read by the key people within 48 hours.
However, video conferencing has not completely replaced the face-to-face meeting. And even if our clients were happy to meet the different buyers over a video call, in a sellers’ market like the one we are still in, all buyers want the opportunity to be able to pitch why they are the perfect partner face to face. They also – quite rightly – fear that if others meet face to face, and they do not, they will be at a disadvantage.
Technologies change behaviour, and so we have changed our advice. But if one wants to get a message across there remains no better way of doing it than face to face.
Insurance
There were no real signs of a summer lull in UK Insurance M&A activity during July, with ten new deals to report on.
As ever, the majority of new announced transactions were in commercial broking. Global Risk Partners, whose own acquisition by Brown & Brown completed during July, announced three new deals in the period, acquiring First Insurance Solutions in Maidstone, Woodward Markwell Insurance Brokers in Ipswich, and – via its Birmingham ‘hub’ business Newstead Insurance Brokers – Crendon Insurance Brokers. Together these deals add around 100 additional staff to the group and take GRP’s total deal tally above 100.
Other consolidators (and I am donning my tin helmet as I type that word, as some of them get in touch to tell me off for referring to them as such…) that were active in July were Jensten, Clear, and Seventeen. Jensten Group announced that they had separately acquired both Ravenhall Risk Solutions, a Chartered broker with offices in Belfast, Luton and Leeds, and Origin UW, an MGA based in Tunbridge Wells and specialising in SME business. Clear Group, who very recently received new investment from Goldman Sachs, announced a deal for GSI Commercial Services in Kent. And Seventeen Group, which has also recently announced a refinancing, acquired Bryce-Smith & Partners, a small HNW specialist in London.
Away from the commercial broking consolidators, Aviva announced a (previously trailed) deal to acquire the HNW personal lines business from MGA Azur Underwriting, further boosting its private client business, Ardonagh announced that its MGA business Geo Underwriting had acquired loss recovery and assistance specialist Lorega from PE backers Alcuin Capital Partners, and Booking Protect, the leading refund protection specialist, announced that it had been acquired by Cover Genius, a global insurtech focused on embedded insurance and best known for its ‘XCover’ distribution platform.
Investment
The M&A deal flow in the Investment sector did not run dry in the heat of July, especially not in the wealth management sector where Hurst Point Group, backed by the US-based international private equity manager, The Carlyle Group, announced the acquisitions of Metis Wealth and Metis Asset Management, subject to regulatory approval, each with £750m of AUA and c. £190m of AUM, respectively. The acquisitions with raise Hurst Point Group’s total client assets to nearly £8bn.
Investec Wealth & Investment announced it had agreed to acquire Edinburgh-based Murray Asset Management. Originally an investment management department within Scottish law firm Murray Beith Murray, it was spun out as a separate entity in 2008 and has since grown to 20 employees providing the bulk of its clients with discretionary portfolio management services.
Wren Sterling bought Oxford-based Critchleys Financial Planning, adding 300 clients and £150m in AUA in its second acquisition since Wren Sterling’s secondary management buyout by private equity firm Lightyear Capital late last year. Progeny announced plans to acquire Edinburgh-based Chartered Financial Planners, Balmoral Asset Management, to bring its AUM to over £6.5bn. Clifton Asset Management completed the acquisition of Burnett & Reid Wealth Management after receiving significant funding from specialist lender Boost & Co. Aberdeen-based Burnett & Reid is an independent financial advice firm with c. £180m of client assets. One Four Nine acquired Glasgow-based APC Financial Solutions & Consultancy Services, marking its fourth acquisition since launching in October last year and increasing its AUM to c. £650m across 2,000 clients. Cabot Square Capital-backed MKC Wealth acquired Cheshire-based Genius Wealth Management with 300 clients with c. £150m of assets. Kingswood completed the purchase of Smith Pearman and Associates, which looks after over 240 clients with over £70m assets under advice in the Surrey and Hampshire region.
Among the discretionary fund managers, Titan Wealth agreed to buy Poole-based Baggette Asset Management which currently has £180m of AUM, including the Mazarin Fund range. As part of the deal, Titan will form a strategic partnership with Baggette Wealth operating as a retail distribution partner. The acquisition brings Titan Wealth’s total AUM to £5.2bn.
In the asset management space, Foresight Group, the infrastructure fund and private equity manager, agreed to acquire Infrastructure Capital Holdings for up to A$140m (£79.6m). Based in Sydney, Australia, Infrastructure Capital Holdings provides investment management and asset management products and services to an established client base of domestic and international institutional investors.
It was also rumoured that investment bankers Rothschild have been appointed to find a buyer for the private equity arm of abrdn, which has £14bn of AUM.
Lending
July was another quiet summer month for the lending M&A markets.
Mortgage Advice Bureau completed the previously announced acquisition of a 75% stake in Fluent Money Group, a telephone advice mortgage broking provider, for £73m. Pivotal Growth, a joint venture between Pollen Street Capital and LSL, made its fourth acquisition, a Southp
Challenger bank Oxbury raised another £20m from its existing and new investors following a £31m funding round in March.
Elsewhere in the sector, embedded finance provider Sonovate completed a £165m securitisation deal with BNP Paribas and M&G Investments.
*IMAS Corporate Finance LLP has been acquired by MarshBerry.
