M&G buys wrap platform Ascentric from Royal London
John Foley: ‘deal strengthens our position’ (pic: Terry Murden)
M&G has acquired digital wrap and wealth management platform Ascentric from Royal London.
The acquisition will bring £14 billion of assets under administration to M&G, as well as relationships with more than 1,500 advisory firms acting on behalf of over 90,000 individual customers.
John Foley, Chief Executive of M&G, says: “This deal strengthens our position in the UK savings and investment market, complementing our existing offering to advisers and customers with a well-established digital wealth management platform.
“Ascentric’s platform will also accelerate our ability to provide a wider range of M&G and Prudential investment solutions to more customers, through the tax wrappers and service propositions they favour. Advisers will also benefit as we invest to grow the platform.”
The acquisition brings to M&G a capability to offer third-party discretionary fund management services, as well as Individual Savings Account (ISA), Self-Invested Personal Pension (SIPP) and General Investment Account (GIA) wrappers on a single platform.
The agreement follows a comprehensive strategic review led by Royal London’s chief executive, Barry O’Dwyer.
Barry O’Dwyer: ‘we explored a number of options’
Ascentric has been part of Royal London since 2007. It became a wholly owned subsidiary in 2014.
Commenting on the sale, Mr O’Dwyer, said: “As part of our strategic review of the business, we explored a number of options for Ascentric.
“The business has been performing well following its re-platforming and we sought an outcome that would take it to its next phase of growth.
“We believe that a sale to M&G delivers this for Ascentric and I am pleased to have found a buyer who has a strong commitment to Ascentric’s client and customer base and who is looking to further grow the business.
“I would like to thank the Ascentric team for their contribution to building a valuable business over the past years.
“At Royal London we still remain firmly committed to the adviser market as we drive through a major digital transformation programme and develop new capabilities to help advisers better meet the needs of their customers.”
Rob Regan, chief executive of Ascentric, said: “This is a compelling transaction for Ascentric.
“It is very clear that M&G is aligned with our values and ethos and represents a good home for our advisers, strategic partners and staff.
“M&G is well-placed to take us on the next stage of our journey leveraging its scale to grow the business. We look forward to working with M&G to support our clients and customers going forward as well as through the transition from Royal London’s ownership.”
Pinsent Masons served as Royal London’s legal counsel and Fenchurch Advisory Partners as Royal London’s financial advisers.
M&G assets hit by stock market shock
M&G today said it remains financially strong despite the “shock” to stock markets caused by the coronavirus which contributed to an 8% fall in assets under management and administration from £352 billion to £323bn as at the end of March.
“Given our financial strength and the importance of dividends to investors, we will pay our dividends of £410m (comprising an ordinary dividend of 11.92 pence per share and a special demerger dividend of 3.85 pence per share) on 29 May as previously announced,” said the company.
M&G’s 6,000 staff continue to serve customers and manage their assets from their homes until it is safe for them to return to their offices. None has been put on furlough and the company not taken any government financial assistance related to COVID-19.
“Our Institutional asset management business continues to perform well through the crisis, attracting net inflows of £2.1bn during the first quarter. Similarly, in the UK, our Retail Savings franchise saw net inflows of £0.7bn. These positive movements were offset by retail asset management net outflows of £5.6bn in the quarter.
Adjusted operating profit of £134m reflected strong underlying business performance, offset by negative mark to market impacts
The heritage segment – the Prudential UK life insurance and annuity book which is closed to new customers – continues to generate steady cashflow.
The company remains committed to its target of £145m of annual shareholder cost savings by the end of 2022.
John Foley, Chief Executive, said: “I’ve been through a number of financial crises, but none has been like this terrible pandemic. It is testing all of us, in many different ways.
“Fortunately, M&G is a resilient business and I am proud of how my colleagues have risen to the challenge of continuing to serve, from their homes, the millions of customers we have around the world.
“Our financial strength means we can also do the right thing by our shareholders, and make good on our announced intention to pay dividends totalling £410m. Many of our shareholders are income funds or individual savers who rely on these payments for part of their retirement income.
“While markets have recovered from their March lows, I expect volatility to continue, but as an asset owner of scale we are well positioned to acquire assets at competitive prices.
“In the meantime, we will continue to manage the business in a prudent way, with our usual disciplined approach to capital management.”