Quilter Cheviot spent around £8.5 million on the discretionary fund management (DFM) arm of advice consolidator Attivo Group, financial statements have revealed.
Old Mutual Wealth-owned Quilter Cheviot bought Attivo Investment Management in January this year. The sale brought an additional £300 million of assets under management to Quilter Cheviot’s existing £20 billion.
In its results for the six months to the end of June 2017 Old Mutual Wealth stated Quilter Cheviot’s funds under management had grown to £22.5 billion.
The amount spent on Attivo Investment Management is shown in the financial statements for Attivo Group for the period between 1 October 2016 and 31 March 2017.
‘During the period Attivo Investment Limited contributed post-tax profits of £487,970 (2016: £1.3 million) and a profit on disposal of £8.5 million was recognised in the consolidated profit and loss account,’ it states.
Neither Old Mutual Wealth nor Quilter Cheviot were willing to comment on the figure.
The deal, completed in March, is described in the Old Mutual Wealth half year results as the purchase of a UK-based ‘investment management business offering a comprehensive investment management service. Other intangible assets of £9 million, relating to customer relationships, were recognised as a result of the acquisition. No goodwill was recognised on this transaction.’
Stephen Harper, chief executive of Attivo Group, said the deal had not been made lightly and was done, in part, because of mounting regulatory costs and also to avoid any conflict of interest.
‘We feel really strongly that what is important to our clients today is that they are getting genuinely independent advice and while I understand the value of vertical integration I think our clients value independence much more,’ said Harper.
‘We had three regulated businesses in the group, we were doing three lots of regulatory returns, three lots of capital adequacy and of course capital adequacy has changed over the last two years.
‘As a growing business our capital adequacies were growing quite significantly. When you put it all together we felt it is what our clients want, it is best for our clients and it differentiates us from the majority of large firms. Further, it reduced our regulatory burden and capital adequacy costs and that was also money we could put to real valuable use to continue growing the business,’ he said.
In Attivo Group’s statements filed at Companies House, it states a drastic jump in pre-tax profits following the deal.
In the six months from October 2015 to March 2016, the company made a loss of £160,500. For the same period the following year it made a pre-tax profit of £8.3 million.
Harper said it had been a 'unique year' and it was important the underlying trading companies, Attivo Financial Service and Attivo Financial Planning, were profitable even when the holding company at group level had not been before the deal with Quilter Cheviot.
For the year to 31 March 2017 subsidiary Attivo Financial Services, which is described as providing services to IFAs, made a pre-tax profit of £827,496 and £448,665 for the year before.
Attivo Financial Planning made a pre-tax profit of £570,983 in the six months to 31 March 2017 and £1.4 million in the six months before that.