Several self-invested personal pension providers are renewing their hunt for new books of business to buy this year, although insiders have told FTAdviser those looking to sell have not come to terms with the true value of their businesses.
Earlier this week Mattioli Woods revealed it had taken over a portfolio of 140 Sipp and small self-administered scheme pensions for a nominal £1 from Torquil Clark, joining the Sipp panel of its owner Bellpenny, the restricted adviser consolidator that controls more than £3bn in assets.
Speaking to FTAdviser, Mark Smith, Mattioli Woods’ head of compliance, explained that in a similar way to last year’s deal with Ashcourt Rowan, the firm’s strategy is to partner with national advisory networks to provide Sipp and Ssas administration services for those IFA where they are no longer a core part of the business, possibly after their own acquisitions.
He said: “It helps us to develop relationships with national advisers, you can pick up individual cases from IFAs, but we want to try and enter into bigger partnerships.”
Jeff Steedman, head of Sipp and Ssas business development at Xafinity, agreed that owner-occupier and bolt-on Sipp divisions will increasingly be targets for acquisitive administrators, but stressed that many of those looking to sell have not come to terms with the true value of their businesses.
He said: “These transactions can take well over six months, so I think some of those who want to get out before the capital adequacy rules come in next year will have to get a move on. Those with significant esoteric asset exposure have been finding it hard to sell.”
Martin Tilley, director of technical services at Dentons Pension Management, explained that of the last two deals they have done, one was on and off the due diligence process for almost 18 months, while the other was around six months.
He said: “It will also depend however on the type of deal, if you are taking any liabilities on too, deep due diligence is required. If you are acquiring the trustee but not administrator, then possibly a little less may be required and if you are taking clients by transfer to your own Sipp, then less still.
“We are acquisitive for the right business and we have looked at several over the last six months, but have either found them overvalued or including assets within the book and a deal structure that we would not be comfortable taking on.”
Greg Kingston, head of marketing and proposition at Suffolk Life, said there was no set rule or formula to accurately judge how long a deal will take.
He said: “But even then I don’t think that 1 September 2016 [when new capital adequacy rules come into force] is a hard date by which point firms must decide whether or not they’re going to continue in business.
“I think that, practicably, there is another date beyond September 2016 and that is the date when the regulator revisits the industry again to see how the capital framework has been embedded.”
Robert Graves, head of pensions technical services at Rowanmoor, told FTAdviser that the rush for sales was more likely to be this time next year, with many smaller firms looking to see whether they can take advantage of April’s pension changes in order to hit targets.
He said: “There are many other things to be thinking about over the next 12 months, so I think we’ll see more of a flurry next January.”
Mr Graves agreed that the majority of business being done is sales of Sipp units that are not part of a primary company.
One firm bucking the trend was Liberty Sipp, who’s director John Fox opined that he has seen the chaos that ensues for both the new administrators and customers.
Mr Fox said: “We are quite happy picking up cases from those disgruntled customers who feel that they have been forced into the clutches of the new Sipp provider.”
He explained that the firm has transferred cases from smaller to larger Sipp firms, where while the sale between providers has been relatively quick, the amount of administration that has to be done to unpick individual cases “looks like a nightmare”.
“We’ve also seen how customers suffer from the charging process that the new Sipp provider imposes on them as part of the transition to their systems – I’ve personally seen charges from one un-named acquisitive Sipp provider to one customer which reached £3,000 which was unbelievable.”
peter.walker@ft.com
