Tavistock bats off hostile takeover to command higher price in fresh deal

Alexandra Newlove, 14/06/2021

Brian Raven

A wealth management firm which recently batted off a hostile takeover bid from a competitor has entered into a fresh acquisition agreement – with a new consolidator of asset managers.

Tavistock Investments has signed a 10-year strategic partnership with Titan Wealth Holdings, a London-based but Jersey-incorporated company registered in November 2020.

Titan has been set up by Andrew Fearon, the co-founder of three-year-old IFA consolidator Independent Wealth Planners, and James Kaberry, the entrepreneur who founded Pantheon Financial Management, which grew to be one of the UK's largest financial advisory firms.

Titan has also agreed to acquire Tavistock Wealth Limited, Tavistock's multi-asset manager with £1 billion of funds under management, for up to £40 million in cash, together with a ten-year earn out. Overall, Tavistock has about £4 billion in other funds under advice.

Titan’s offer appears to compare favourably with an unsuccessful hostile takeover bid recently launched on Tavistock in March, by Jersey manager TEAM. TEAM’s bid gave Tavistock’s entire business a value of £15.2 million – an offer the target firm dubbed “an unwelcome distraction”.

Titan is backed by three private equity firms – Ares, Hambleden Capital, and Maven Capital Partners – the UK division of which was bought by listed wealth manager Mattioli Woods earlier this month.

Titan said its objective is to become a “large-scale provider of high-quality execution, settlement, custody and administration services to the asset and wealth management sector”. It also said it was in talks to buy Global Prime Partners (GPP), a provider of platform services to institutional clients and fund managers with £2 billion in assets under administration.

Following the deal, Tavistock will act as Titan's retail distribution partner and said it expects the transaction to drive growth, both organically and via acquisition.

A new company within the Tavistock Investments Group, Tavistock Asset Management (TAM), will continue to market the group's centralised investment proposition which will include both the ACUMEN UCITS funds and the model portfolio service (MPS). TAM will retain Titan as investment manager for the MPS.

Brian Raven, Tavistock's chief executive, said via statement: “This is a great opportunity for both companies.

“Whilst Tavistock Wealth is becoming part of Titan, we will still be working closely with our highly successful investment team. The partnership with Titan endorses our corporate strategy and will enable us to accelerate the growth of our business and deliver maximum value to our shareholders.”

Titan will pay £20 million on completion, with a further £20 million paid in equal annual instalments over the following three years, linked to the maintenance of TWL's revenues. In its audited accounts for the year ended 31 March 2020, TWL reported a pre-tax profit of £2.3 million from gross revenues of £5.6 million and gross assets of £5.2 million.

Under the strategic partnership Tavistock will also receive additional payments over a ten-year period equivalent in value to 50 percent of future net income on any increased funds under management within TWL's UCITS funds.

Private equity capital has underpinned much corporate activity in the wealth management and financial advice sectors in recent years.

Earlier this year Canaccord Genuity Wealth Management UK (CGWM UK) garnered funds from HPS Investment Partners, which agreed to buy approximately £125 million worth of shares, equating to 21.9 percent of CGWM UK.

In addition to the Permira and Warburg Pincus capital investment in the Tilney Smith & Williamson deal, US private equity giant Carlyle's Hurst Point Group recently announced its acquisition of Hawksmoor Group. The PE firm has acquired a further five wealth management businesses in the past year.

Pollen Street Capital also committed £80 million to AIM-listed Kingswood, to support the firm’s stated £100 million pipeline of potential targets.