Another self-invested pensions provider has exited the market as consolidation continues following the regulator’s announcement of tougher capital adequacy rules, with Ashcourt Rowan announcing that it has sold its 750 scheme-strong book to a subsidiary of Mattioli Woods.
City Pensions Ltd, a subsidiary of the pensions consultancy and wealth manager, has acquired the pension administration business of Ashcourt Rowan which manages £300m worth of assets in self-invested personal pensions and small self-administered schemes, in a deal worth up to £1.3m.
The consideration comprises of an initial consideration of £700,000 subject to adjustment for the value of working capital acquired, plus deferred consideration of up to £625,000, subject to certain revenue and client retention targets being met in the five years following completion.
Last year, Mattioli Woods told FTAdviser it would be looking at acquisitions of rival Sipps providers as increased capital adequacy requirements proposed by the regulator last year catalyses market consolidation.
Since the then Financial Services Authority’s thematic review last year, which resulted in substantially enhanced capital adequacy and disclosure requirements, there have been a flurry of Sipp acquisitions.
At the tail end of 2012, Alliance Trust Savings announced that it had sold its Sipp book to Curtis Banks, while last month, Dentons Pensions Management purchased 650 plans from RSM Tenon.
The FSA proposed a hike to capital adequacy requirements for Sipp providers, whereby the absolute minimum capital a Sipp operator would have to hold will increase from £5,000 to £20,000. If a Sipp operator has non-standard investments such as commercial property they will have to hold more capital in the event that the scheme has to be wound down.
Mattioli said the acquisition is being funded from its existing cash resources and will result in an initial cash outflow of £750,000, including deal costs.
The acquisition comprises the trade and certain assets of Ashcourt Rowan Administration Ltd, the entire share capital of Ashcourt Rowan Pension Trustees Ltd and Robinson Gear (Management Services) Ltd, together with the pension business within Ashcourt Rowan Holdings, a wholly-owned subsidiary of Ashcourt Rowan.
Acquired by Ashcourt Rowan in 2006, the business provides trustee and administration services to over 600 self-invested personal pension schemes and 150 small self-administered pension schemes, with total funds under trusteeship of over £300m.
In the year ended 31 March 2012, it generated a profit after taxation of £134,535 on revenues of £674,285. The estimated liabilities being acquired are £115,168.
Ian Mattioli, chief executive of Mattioli Woods, said: “As financial markets change, there is real synergy in organisations like Ashcourt Rowan and Mattioli Woods entering into strategic partnerships to deliver better service and long term security for clients.
“With increasing complexity and continuing consolidation in the Sipp sector, we anticipate there will be further opportunities to expand Mattioli Woods’ operations, both organically and by acquisition.”
Jonathan Polin, group chief executive of Ashcourt Rowan, added: “The administration of Sipp and Ssas schemes is not core to our business.
“We have found a strategic partner with the expertise, scale and systems to give the very best service to our clients. Mattioli Woods is an organisation that is aligned with our values and has the same view of the broader wealth management market as we do.”
