Private equity group Permira appears to be the latest firm set on consolidating the UK’s fragmented UK wealth management sector, with plans to buy Deutsche Asset & Wealth Management’s Tilney business.
At the time of writing, Permira was in advanced talks to buy the business from Deutsche, in a deal that follows its November acquisition of Bestinvest. It is believed Deutsche will face a write-down, given it paid around £300 million for Tilney in 2006 when the firm managed assets of £6.7 billion.
If Permira plans to merge the two businesses, it would add Bestinvest’s £5 billion in assets to Tilney’s £4.6 billion (as at the end of 2012), creating a significant player in UK wealth management. But what would the merged business look like?
Consultant Michael Maslinski believes the main attractions of the Tilney business lie in its client base, assets and regional office network.
‘As it stands, I imagine what Permira are buying is a footprint and a brand to put on [Bestinvest’s] additional expertise, services and products,’ he said. ‘Bestinvest had the service proposition and now wants the client base and the distribution network.’
Bestinvest offers a diverse range of services, including financial advice and investment management, a managed portfolio service and execution-only platform, so the Tilney deal would give Bestinvest the scale it desires.
Maslinski anticipates the possible appointment of a new management, overseeing the enlarged entity. ‘Clearly, the reason [Permira] is buying Tilney is that it wants to run it differently than it has been run,’ he added.
A source close to the deal stresses the strength of Tilney’s regional business. Contrary to the assumption that Permira will target synergies, the source suggested Bestinvest may consider relaunching the Tilney brand.
‘In terms of the regional branches, having the Tilney name would be positive. People know Tilney, the local investor knows Tilney, but doesn’t really know the other names.’
The source believes the Tilney assets will likely slot on into Bestinvest’s centralised investment platform, with opportunities to offer financial advice to Tilney’s client base through the Bestinvest network.