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Towry agrees £47.3m debt package with RBS and Macquarie

by Jun Merrett on Sep 21, 2012 at 07:50

National IFA Towry has agreed a £47.3 million financing package with the Royal Bank of Scotland (RBS) and Macquarie Bank.

The debt issuance was arranged by Towry's parent company Palamon Capital Partners and is composed of £42.5 million of senior and junior loans from Macquarie and £4.8 million of senior debt from RBS who was already a lender for Towry. It has been used to replace a mezzanine debt facility.

Towry chief executive Andrew Fisher (pictured) said the debt agreement would help power further expansion of the group. 'The new lending facilities that we announce today significantly reduce our financing costs and provide a sound capital structure for further expansion of the company,' he said. 'Our finance team has put in an exceptional amount of work in order to secure these loans, which we believe will help us to achieve our ambition of becoming the leading firm of wealth advisers in the UK.'

Daan Knottenbelt, partner at Palamon Capital Partners, said: 'The improved efficiency of the capital structure of Towry is a testament to the strength of its business, which since our initial investment has grown assets under management by almost 40% per year to £4.6 billion through a combination of organic growth and strategic acquisitions.

'The financing structure provides a sound basis from which further expansion can take place to continue the company’s high rate of profit growth and solidify its position as a national leader in the IFA sector.'

Florian Herold, co-head of Macquarie European Lending said: 'We believe Towry is a well-regarded, high-growth company with strong recurring revenue streams. Working closely with the management team at Towry and Palamon, we are delighted to have been able to develop and put in place a financing structure that meets their specific needs.'

Towry advises on around £4.6 billion of assets for 25,000 clients.

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12 comments so far. Why not have your say?

Wasnt it borrowing and gearing that created this financial mess we find ourselves in?

Should a financial planning company carry this amount of debt?

Easy to use someone else's money!

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'Further expansion' is mentioned twice - so who is on the purchase radar then, and more importantly for many does this mean any chance of staff and ex-staff realising any money for their shares is still a very long way off.....

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I thought Towry was going to raise all the capital needed by an IPO??

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National IFA my A*se! If journalists were regulated in the same manner as advisers, Citywire would be in breach for issuing misleading information! get it right Citywire!

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No JonnieB666 Towry consider the whole of the market for each client before deciding that its own funds are best for each client.

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Oh I see, just like Knight Williams in the 80's! How niaive of me! Now I need to get back to some real IFA work.

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SJP standby -you're on the radar!

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So if Palamon thinks the repayment of mezzanine debt aquired in haste at a high cost to fund the mess following the Edward Jones aquisition by longer term more commercial debt is testiment to the strength of the business, they should look again.

The business model of acquiring firms that gave good advice but no longer wish to trade is the main reason the FUM has increased. Their argument that these investments are not constantly risk controlled, and represent poor value is nonsense, especially when compared to their own offering.

The FSA has insisted that before a transfer takes place, full details of the costs and charges of the ceeding investments be shown to the clients, alongside their own fees.

I do hope the FSA will force them to disclose all their own fees to clients including advice fees, entry fees, management fees and annual review fees just in the same way that an APR is shown on loans. Then the advice to transfer to their own IIM funds will be muddied, and may not be able to be justified.

As their own funds are Distributor Influenced, they should be looked into by the FSA even closer. The FCA has stated they want to extinguish excessive charging, HMRC are looking into excessive fees from pensions in case they breach the authorised payment limits, and Towry's old mukka, Hector Sants is no longer there to protect them. A perfect storm.

Palamon, be aware that things may not be quite so rosy. The way the firm has (via smoke an mirrors) muddied waters to investors, staff, the FSA, the High Court (failed) and possably lenders shows the blind ambition certain staff and directors have to make a fortune from floatation. I realise your objective is similar, but at what cost to your MidWestern American farmer investors consience? God fearing? Towry aint.

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A lot of fuss about a remortgage!

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zzzzzzzzzzzz

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i thought they had disappeared. is it silly season already ?

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Man in Black

Sep 21, 2012 at 17:42

This is a bit of a non-story.

All its covering is how leveraged buyouts work (i.e. predominantly finance/loan notes rather than equity) and the fact that the cost of this finance has fallen a bit in recent times.

BTW, Palamon are not Towry's parent. Towry's parent are an entity based in the Channel Islands. Sadly, you cannot run an investment management company with a UK parent and squillions of debt. Instead, you have to stuff all the debt into parent entities outside the EEA - otherwise you would breach BIPRU8 and the CRD...and the FSA would have to close you down...

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