Sesame sale touted as Friends engages Barclays

Last week, following intense speculation that a sale of the advisory network and support services group could be on the cards, a joint statement from SBG and its parent company Friends Life said work was at an “early stage”.

The statement said: “Over the past two years, SBG has unveiled a broader range of propositions and these developments have helped SBG to strengthen its position as the UK’s largest financial services group for professional advisers, with continued growth in revenue, adviser productivity and new members.”

When asked if SBG will go down the route of a management buyout a spokesman declined to comment.

Skandia has been known to be on the look-out to take small stakes in advisory firms and networks. When asked if it would be interested in SBG, a spokesman said: “We don’t know the detail of Sesame so we cannot comment. We are in talks with some adviser firms about taking a small stake but no deals have been confirmed.”

The announcement comes during a time of cost-cutting for Friends Life, which acquired Sesame for £75m from software provider Misys in March 2007.

In 2009, Friends Provident Group announced that Sesame Group completed the acquisition of Bankhall from Skandia UK to form SBG.

At the time, a statement from Friends Provident said the deal would “further strengthen” Friends Provident’s position in UK financial services distribution.

However, according to Nic Clarke, analyst for Charles Stanley, Friends Life may be looking to sell SBG to make some money out of the network, which last year posted a profit of £1m.

Mr Clarke said: “The Resolution model has changed so much since it was set up a few years ago. It seems that it was going to take closed life businesses, put them together, then sell them. It then decided it would do this with open life businesses and brought together Friends Provident, Axa UK Life and Bupa Health Assurance.

“In the current market environment it has decided not to raise any more money. I do not think the outlook is spectacular.”

Mr Clarke added that Lombard has done well and so has Friends International, so cash could also be realised from a sale of these business arms.

He pointed out the recent disposal of Friends Life’s 30 per cent holding in Malaysia-based AmLife, which was set up in 2008 for £30m and sold for £50m cash in 2012.

When asked about its financial position a Friends Life spokesman said: “Significant investment is being made in Friends Life from the profits of the business and we have a strong cashflow position. We have no plans to ask shareholders for additional funds.

“We firmly believe Resolution has an exciting and independent long-term future. We have a clear strategy for our heritage, UK and International businesses, and are applying strict financial discipline to ensure that the business achieves its objectives for shareholders.”

Last year, Friends Life announced 150 further redundancies, in addition to the 600 redundancies in 2011 as part of the rationalisation of Friends Provident, Axa UK Life and BHA.

It is understood that discussions are still ongoing with union Unite over the 150 roles put at risk last year.

It is also understood that Iain Mallon, formerly the director of protection marketing and currently the director of strategy and new propositions, will be leaving the insurer’s protection business.

However, a spokesman for Friends Life, said: “ With the very experienced Steve Payne as managing director and Mark Anders as sales and marketing director, the development of products is in good hands and we see a number of potential opportunities resulting from ongoing government reforms and initiatives.”

Chief executive Andy Briggs told shareholders in 2012 that the company was committed to a cost saving of £160m and that it was not going to pursue its previously stated strategy of buying more life businesses.

The Friends Life spokesman said: “We increased our overall UK cost reduction target from £143m to £160m by end 2015 because of the good progress we have made in completing the separation, integration and outsourcing programmes and further opportunities for delivering operating efficiencies and cost reductions have been identified.”

It has been confirmed that the final salary pension scheme is in deficit to the tune of £185m. A Friends Life spokesman said: “A 10-year funding plan has been agreed between the company and the trustees of the scheme to address the deficit.”

THE ADVISERS

Sixty-eight advisers joined Sesame last year to seek a new home following the collapse of advisory firms Blake Independent Financial Planning and Honister businesses Burns Anderson and Sage Financial Services during the summer.

Brian Morrow, a sole trader who joined Sesame from Burns Anderson last year, said: “The most important thing for me is to concentrate on my clients.

“It is a totally different situation to what happened with Honister.

“I may have chosen someone else had I known abut the strategic review, but I suppose no network is completely safe.

“It is too early to start getting worried about the future of Sesame. It will affect me if I am unauthorised, but the number one thing for me now is to see my clients and give advice.”

Paul Wells, director of Sheffield-based Wealth Management and Growth, which transferred from Sage to Sesame last September, said: “The strategic review has created uncertainty. We chose Sesame because it was the largest network and hoped that would give us some breathing space.

“I am now questioning that decision. The nature of networks is changing because of the RDR. They are all going to have to change.”