Titan has agreed to acquire UK-based Tavistock Wealth Limited, a multi-asset manager for a consideration of up to 40 million pounds in cash. Also, Titan is seeking to acquire Global Prime Partners, a provider of platform services to institutional clients and fund managers. No financial terms were disclosed.
LONDON, UK: Tavistock Investments Plc has entered a 10-year strategic partnership with Titan Wealth Holdings Limited (Titan).
In addition, as a part of the arrangements Titan has agreed to acquire Tavistock Wealth Limited (TWL), Tavistock’s multi-asset manager with over £1 billion of funds under management (FUM), for a consideration of up to £40 million in cash, together with a ten-year earn out.
Titan has been established by a highly experienced management team with strong financial backing. Titan’s objective is to become a large-scale provider of high-quality execution, settlement, custody and administration services to the asset and wealth management sector.
In addition to acquiring TWL, Titan is simultaneously seeking to acquire Global Prime Partners Limited (“GPP”), a provider of platform services to institutional clients and fund managers with £2 billion in assets under administration.
The principal terms of the partnership including the sale of TWL are:
· Tavistock will act as Titan’s retail distribution partner;
· the strategic partnership will enable Tavistock to accelerate the growth of its wealth management business both organically and through an acquisition programme (Tavistock currently has approximately £4 billion of Funds Under Advice);
· Titan will acquire TWL for a consideration of up to £40 million (equivalent to 6.58p per Tavistock share based on the current number of shares in issue) to be paid in cash, together with a 10-year earn-out;
· £20 million will be paid on completion, with a further £20 million paid in equal annual instalments over the following 3 years, linked to the maintenance of TWL’s revenues;
· Under the strategic partnership Tavistock will also receive additional payments over a ten-year period equivalent in value to 50% of future net income on any increased funds under management within TWL’s ACUMEN UCITS funds; and
· 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 Company’s Model Portfolio Service (“MPS”). TAM will retain Titan as investment manager for the MPS.
Whilst becoming part of Titan, John Leiper, Tavistock’s Chief Investment Officer, and his investment team will continue to work closely with Tavistock and its advisers.
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. The transaction will greatly enhance Tavistock’s cash resources and will enable it to minimise shareholder dilution as it embarks on an accelerated acquisition programme.
The Board anticipates that the contribution to Tavistock’s profitability from this programme will significantly outweigh the loss of TWL’s contribution to Tavistock in the short to medium term.
Titan’s management team has a long and successful track record in the asset management and wealth platform sectors. Its board includes:
· James Kaberry, Executive Chairman and Joint CEO – an experienced entrepreneur who founded Pantheon Financial Management, which grew to be one of the UK’s largest financial advisory firms and then became CEO of SME Capital, a lender to lower middle market SMEs
· Andrew Fearon, Joint CEO – a partner at Welbeck, a firm that facilitates finance for growing companies and most recently, a founder shareholder and NED of Independent Wealth Planners (IWP), an IFA consolidation vehicle, where he is responsible for M&A. Andrew has considerable experience of strategic debt raising in the IFA and wealth management space.
The parties have exchanged a contract transferring the ownership of TWL to Titan with completion of the transaction dependent upon, inter alia:
· receipt of change in control approval from the Financial Conduct Authority in respect of TWL;
· formal approval of the transaction by Tavistock’s shareholders, as required by the AIM Rules for Companies, as the sale will be deemed to be a fundamental disposal pursuant to AIM Rule 15; and
· there being no material adverse change in TWL’s business prior to the date of completion.
For the avoidance of doubt, Tavistock will, on completion, continue to be classified as an operating company and not as an AIM cash shell pursuant to AIM Rule 15.
The Company has received irrevocable undertakings to vote in favour of the resolution to approve the disposal from shareholders holding, in aggregate, 50.56% of the Company’s issued share capital.
James Kaberry, Titan’s Executive Chairman, said: “We are excited to partner with Tavistock and look forward to a successful future together. We have been impressed by Tavistock’s leadership team, the business that they have developed, and the outstanding investment funds run by Tavistock Wealth.”
Brian Raven, Tavistock’s Chief Executive, said: “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.”