Wrap acquisition

Nucleus acquired by James Hay in £144.6m deal

David Ferguson

David Ferguson: key role in a bigger story

Financial wrap platform Nucleus is being acquired by James Hay Holdings in a recommended deal valuing the Edinburgh-based company at £144.6m.

It will create an independent adviser platform with about £45bn of assets under administration. 

The companies said it will have the scale to enable greater investment in technology, products and service to meet the needs of advisers and their clients.

Whilst there is no immediate change for advisers on either platform, separately James Hay has entered into a long-term partnership with FNZ for the provision of specialist platform technology and outsourced administration.

It is envisaged that underlying platform administration services for the combined group will be provided by FNZ over time with the migration of some technology and the platform administration of Nucleus’ assets from the existing arrangements onto FNZ’s technology and operations.

The board of Nucleus, led by CEO and founder David Ferguson, has recommended that its shareholders vote in favour of the deal and Nucleus’ largest shareholder Sanlam, which owns 52.19%, has agreed to support the transaction. 

Mr Ferguson’s 3.7% stake is worth about £5.35m.

The acquisition is subject to various approvals, including from Nucleus shareholders and the FCA, and is expected to complete in the second quarter of 2021. 

Mr Ferguson, said: “Since we launched in 2006 we’ve always put the customer centre stage and while that has made us a little bit different, it’s carried us to £17.4bn in AUA and to a point where the sentiment of our users and our people has never been better.

“Becoming part of this enlarged group gives us a key role in a much bigger story where we can create a leading independent platform of scale with a high tech, high touch proposition and philosophy.

“The combination of our people’s talents and the size of the opportunity can see us carefully navigate the roadmap to deliver on this collective medium-term goal. 

“I look forward to getting to know our new colleagues and moulding a group culture that is centred on doing the right thing and building a market-defining product that really delivers for advisers and their clients.”

Commenting on the offer, Richard Rowney, CEO of James Hay said: “We are very excited to be announcing the creation of one of the leading, independent, adviser platforms, with over £45bn of AUA.  The two businesses have complementary areas of expertise and common beliefs about the importance of independence and only serving the adviser market. 

“We admire much about Nucleus and the skills within its team, and look forward to working with them to better serve the growing needs of advisers.

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“By joining forces, we can combine Nucleus’ reputation for great digital user-experience and James Hay’s pension specialism, creating greater strength and a platform with the scale to invest and deliver real value for advisers and their clients.”

For the year ending 31 December 2019, Nucleus recorded £6m in profit after tax, up 25% on the previous year. 

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.

Nucleus revealed on 2 December it had received separate proposals from Integrafin Holdings and Epiris in conjunction with its associate James Hay Partnership Management regarding possible cash offers for the company.

The company said it was also in preliminary discussions with Aquiline Capital Partners and Allfunds (UK) regarding potential offers.

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