STM Group, a cross border financial services provider, has agreed to acquire self-invested personal pension (SIPP) provider London & Colonial Holdings for £5.4m.
STM will pay £4.13m of the consideration following completion of the deal, which is expected by December 2016. An additional £1.25m will be paid in three stages over the 12 months after completion.
The deal will be financed by existing financial resources and a new £3.3m short term bank credit facility.
In addition to the UK SIPP business, STM will also purchase London & Colonial’s Gibraltar-based Qualifying Recognised Overseas Pension Schemes (QROPS) book, and its Gibraltar-based insurance business.
The SIPP business has a membership of about 2,000, and generates a turnover of about £1m.
The life assurance business has about 1,200 policyholders and provides a net turnover of nearly £2m, while the QROPS business has around 300 QROPS under management.
The board of STM believes that the deal will “establish STM in the UK SIPP market”, and will generate cost savings of about £750,000 annually.
The transaction has already secured the nod from the UK’s Financial Conduct Authority, and is now subject to approval from the Gibraltar Financial Services Commission.
STM CEO Alan Kentish said: “London & Colonial is a very well respected name within the industry where there are a number of current opportunities that can be accelerated with STM’s resources and critical mass in the QROPs market. Not only does the Acquisition get STM a foothold into the UK SIPP market, it also brings with it a number of bolt-on consolidations in the QROPs and Life Assurance business.
“These will bring STM further economies of scale and will potentially free up regulatory capital in the medium term to fuel further growth.”
London & Colonial Holdings chairman Robin Ellison added: “We recognise that STM’s enviable distribution network will allow LCH’s businesses to flourish more quickly than could be achieved by LCH’s existing management and network.”