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Nucleus in takeover talks with potential buyers

David Ferguson

David Ferguson: founder and chief executive

Nucleus, the Scotland-based financial wrap platform, has confirmed it is in takeover talks with a number of potential buyers.

It has received separate proposals from Integrafin Holdings and Epiris in conjunction with its associate James Hay Partnership Management regarding possible cash offers for the company.

In a statement to the stock exchange the company said it is also in preliminary discussions with Aquiline Capital Partners and Allfunds (UK) regarding potential offers.

Discussions between Nucleus and the respective parties are ongoing.

Shares closed 52.50p (39.62%) higher at 185p valuing the company at £149m.

Nucleus said it understands that Sanlam UK, which owns 52.2% of Nucleus’s issued share capital, is supportive of the Nucleus board engaging in potential offer discussions and the company intends to work constructively with Sanlam UK to ensure that the interests of all shareholders are properly considered.

Sanlam is owned by a South African insurance company.

“There can be no certainty that any offer for Nucleus will be made, nor as to the terms on which any offer might be made,” said Nucleus. 

Its directors, including chief executive David Ferguson, hold about 3.7% of its shares.

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The platform joined the stock market in July 2018 at an initial listing price of 183p per share. While shares jumped on the first day of trading and rose to 231p, it has since struggled. This is in contrast to rival platforms AJ Bell and Transact, whose share prices are up 168% and 155% respectively since they went public in 2018.

Nucleus’s recent acquisition of Glasgow outsourcing firm Genpact Wealth Management UK did lead to a recovery in its share price and, prior to today’s news, was up 18% since the deal was announced on 2 November.

For the year ending 31 December 2019, Nucleus recorded £6m in profit after tax, up 25% on the previous year. Its flows however have been under pressure, and its 2019 net inflows of £509m was down 58%, partly due to ‘withdrawal of assets by firms acquired by consolidators’.

Following the start of the Covid crisis Nucleus announced in March it was suspending its final 2019 dividend. In September, the firm said it would be paying an interim dividend of 1p per share (worth £800,000) but its board decided against declaring a second 2019 interim dividend.

In 2019 and 2018 Sanlam received £2m in dividends from its Nucleus shares.

This year Nucleus also announced it was launching its own low-cost discretionary model portfolios Nucleus IMX, putting it into competition with DFMs like Sanlam.

The Takeover Panel has confirmed that no deadline will currently apply as a result of this announcement.



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