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Wrap platform deal

Nucleus in £1.5m acquisition of OpenWealth

David Ferguson

David Ferguson: greater control

Nucleus, the Edinburgh-based wrap platform, has acquired the UK business and assets of Glasgow firm Genpact Wealth Management UK, trading as OpenWealth, in a £1.5m cash deal.

It will allow Nucleus to take a number of outsourced technology services in-house.

The acquisition will be funded from the company’s existing cash resources and completion is expected by the end of the year.

In November 2018 Nucleus unbundled its technology arrangements from OpenWealth, contracting directly with Bravura Solutions (UK).

As part of the agreement, OpenWealth will continue to provide a restricted range of services to Nucleus for a period of approximately 15 months under a transitional services arrangement.

The OpenWealth staff that currently provide services to Nucleus will transfer to the company, taking the combined Nucleus team to approximately 380.

The acquisition is the next step in the company’s plan to have increased control over its processes, service offering and product development while continuing to license its core Sonata software from Bravura.

Newsletter

The board understands that for the financial year to 31 December 2019, the OpenWealth assets that pertain to Nucleus generated an EBITDA loss of approximately £2.5 million. The assets being acquired by Nucleus have no material book value.

OpenWealth has provided business process outsourcing (BPO) services to the company since 2011, including account servicing and administration. Nucleus believes the acquisition of the assets will allow the company to:

  • further accelerate its product development and automation programme,
  • provide scope to enhance the level and efficiency of its offline service,
  • create new growth opportunities for its people, and
  • accelerate the expansion of its operating margin as it grows AUA.

The acquisition is expected to be earnings enhancing in 2021 before becoming increasingly accretive thereafter.

David Ferguson, founder and chief executive of Nucleus, commented: “Nucleus has continued to grow in recent years, and we expect the greater control afforded by the acquisition to further strengthen our positioning as we pursue our goal of being the most tech-enabled wrap platform in the UK.

“The Nucleus / OpenWealth combination has worked well for the better part of a decade and bringing the two together will allow us to focus more than ever on developing our online product and offline service.

“We’ve always believed that the highest service levels are achieved when the online product is so intuitive that the customer hits the button themselves and on the occasions they are unable to do so, that the offline service is exceptional.

“We believe that this deal will kick-start our margin expansion and accelerate growth by moving us closer to having the best product offering in our market.

“Today marks the start of a new stage in our journey, a milestone towards us achieving a market-leading position for our customers. Improving the quality and flexibility of what we do will be central to that, and I’m excited by the opportunity this affords us in enhancing the overall user experience and helping us to realise our growth ambitions.”



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