The news that the FCA has finally approved the merger between Tilney Group and Smith & Williamson (S&W) should create one of the UK’s biggest specialist wealth management firms with client assets of more than £44 billion, combined revenues of around £500 million, and an enterprise value of £1.8 billion.
But will this mark the end of Tilney’s involvement in the mergers and acquisitions market?
Tilney has become one of the most acquisitive wealth management firms active in recent years since Permira, one of Europe’s biggest private equity firms, purchased its UK regional business from Deutsche Bank for an undisclosed sum in 2014.
The S&W deal, which will cost around £625 million, follows other significant deals, not least the purchase of Towry Group in 2016 for another £600 million.
Conventional practice would suggest that a pause should be in order as Tilney fully integrates S&W.
But Towry’s experience would suggest otherwise. For Towry could claim to be one of the most heavily traded UK wealth management firms over the past 35 years.
An historically popular target
Between its establishment in Liverpool by Thomas Tilney and his son George in 1836, and the mid-1980s, Tilney maintained a relatively low profile as a regional stockbroking firm.
This all changed in the mid-1980s when Tilney became a component of the wholesale restructuring of the UK’s capital and financial markets precipitated by 1986’s “Big Bang”.
In May 1986 Charterhouse, a recently acquired subsidiary of Royal Bank of Scotland (RBS) acquired the firm.
As part of Charterhouse Tilney then went on to acquire Campbell Neil, a Glasgow-based stockbroker, to give it a presence in the city and augment its existing network of offices in Edinburgh, Liverpool, London and Shrewsbury. It then opened an office in Birmingham in 1992.
RBS’ decision to focus on conventional banking activities resulted in it offloading the bulk of Charterhouse to a Franco-German consortium consisting of Credit Commercial de France (CCF) and Berliner Handels und Frankfurter Bank (BHF) in February 1993.
This deal did not involve Tilney. But RBS did accede to a management buy-out (MBO) involving Tilney’s 45 partners with Bank of Scotland providing debt facilities.
Tilney, which now had around £3.8 billion of assets under management, a nine-office network and around 280 staff, then underwent a metamorphosis of sorts with the emphasis very much on investment management rather than stockbroking.
A shift in direction
A change in name in 1998 from Tilney & Co to Tilney Investment Management heralded this change of focus.
Under David Campbell, its chief executive and a former professional footballer with Charlton Athletic, Tilney made a number of private client investment management-related acquisitions.
These included the private client business of Edinburgh Fund Managers and SG Investment Management as well as Cardales, a specialist commercial property investment manager.
This chapter of Tilney’s life ended in April 2005 when it was acquired by Bridgepoint Capital, one of Europe’s biggest mid-market equity buyout groups.
By then Tilney had around £5 billion of client assets under management and would almost certainly have been one of the UK’s largest independent wealth management firms.
Under the Bridgepoint umbrella Tilney still remained active on the acquisitions front by purchasing the discretionary private client business of Clydesdale Bank.
Nonetheless, this chapter was relatively short for in December 2006 it became part of Deutsche Bank as part of the plan of Pierre de Weck, its global head of private banking, to develop an onshore wealth management presence in the UK.
Details of how much Tilney cost Deutsche were not disclosed. The word on the street, however, was that Deutsche paid a very high premium.
This provided the prelude to a relatively quiet period for Tilney under Deutsche’s mantle and the firm adopted a much lower profile.
All changed during the next decade, however.
First Brewin Dolphin acquired Tilney’s London office and business. Then, in February 2014, Pemira, another big European private equity firm acquired the remainder of the business as part of a plan to establish a big UK-based wealth management firm with at least £30 billion of clients assets under management.
With the subsequent acquisition of Towry and one or two smaller acquisitions, such as Ingenious Investment Management, and with the S&W purchase given the go-ahead it looks as if this mission has been accomplished.
So what next?
With New York-based Warburg Pincus as another major shareholder future corporate activity does not look out of the question.
Some experts query the presence of S&W’s tax and professional services division in the enlarged Towry Group.
And, at some stage, both Permira and Warburg Pincus will be seeking a return on their investment.
