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What the Newton deal means for Standard Life Wealth

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What the Newton deal means for Standard Life Wealth

Standard Life Wealth (SLW) will maintain Newton’s long-only investment proposition alongside its volatility-managed target-return solution after the acquisition completes, with SLW chief executive Richard Charnock claiming ‘the important message is there is absolutely no change either side’.

Speaking to Wealth Manager in the wake of the announcement that Standard Life will acquire Newton’s private client division for no more than £83.5 million, Charnock said he sees attractions in both investment propositions, while management teams will spend the next seven months finalising details.

‘The approach Standard Life Wealth and Newton offers will remain. How we are positioning and messaging that is something we are working on,’ he explained.

Newton chief executive Helena Morrissey said she had opted to sell the private client division in order to streamline the business and focus on core activities in the retail, charity and institutional markets. She added that finding an investment-led house with access to a robust institutional process was a key consideration while looking for a potential acquirer.

‘Our focus on direct stocks is going to continue. This was a big part of the negotiations, as we have an investment-led offering and this is what Standard Life want to do as well,’ she said.

Charnock echoed her sentiments: ‘Another aspect of the organisation [Newton] that I really like is they are used to leveraging off a global asset management and institutional fund management business. We do exactly the same at Standard Life, as we are able to leverage off the capability and funds of Standard Life Investments.’

While Newton’s private client division currently has around £650 million invested in Newton’s fund range, Charnock said this was an area for review but the priority was to focus on a smooth transition.

‘This is all to be reviewed, but we are not creating any client detriment in this process. We are bringing the two businesses together later this year and everything we do with the management of Newton clients will be reviewed over a period of time, but nothing changes at this point,’ Charnock said.

Although SLW has experienced rapid growth since launch in 2008, amassing over £1 billion in assets, Charnock said the firm had been open to acquisition opportunities but had strict criteria, which Newton met. The deal will see SLW triple its assets post the deal, as Newton currently runs £3.6 billion.

‘Newton ticks all the boxes for us and was a clear opportunity as it is not encumbered by platforms and corporate entities. It has a strong client base and talented people looking after them,’ he said.

With Standard Life set to pay up to £83.5 million for the business, dependent on the assets that transfer over, Charnock said it was an appropriate value for the business. He is particularly excited about gaining Leeds and Edinburgh offices as part of the acquisition, alongside a stronger presence in the offshore and charity markets.

Post takeover, Standard Life Wealth will take on £400 million of Newton’s charity assets; a range of 11 funds that are predominantly invested in by Newton’s private clients with £800 million under management, alongside £600-£700 million in offshore client portfolios.

Charnock added he would not rule out further acquisitions but is content with where the deal will leave SLW positioned once it completes.

Newton, meanwhile, will retain the lion’s share of its multi-billion pound charity business following the deal, with assets amounting to £3.6 billion.

Morrissey added the charity team, headed by Andrew Pitt, still remains a big growth area for Newton. ‘We are hugely committed to the charity area,’ she added.

The Newton/SLW tie-up in numbers:

• Combined assets: £5.2 billion

• Number of Newton clients: 3,000 high and ultra-high net worth

• Newton charity assets set to transfer: £400 million

• Assets from private client fund ranges: £1 billion (£800 million onshore and £200 million offshore)

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