Rowanmoor Group will meet its capital adequacy requirements, despite only currently having just over two thirds of what it needs to meet the rules coming in next year, the group’s boss said, adding that the self-invested personal pension business is not up for sale.
FTAdviser has been contacted by several sources stating Rowanmoor is up for sale and struggling to meet capital adequacy requirements, but the provider’s managing director Ian Hammond denied he is looking for a buyer.
He said: “We are not up for sale. But if someone came along we may consider it, but it would have to be a really good offer. This is the sixth rumour in the last 18 months that I have heard. Only a limited number of people could afford to buy a big company like us.”
Money Management revealed earlier this year that Rowanmoor has only got 70 per cent of what it needs to meet the new capital adequacy requirements for Sipps, which come into force next September.
Mr Hammond said: “We are now 78 per cent there to meet the cap ad requirement. We have the benefit that Rowanmoor personal pension, which is the Sipp, is part of the wider group so we can inject capital from the group if we are a bit short.
“But there are still 13 months to go and if we have to inject capital from the group into the subsidiary, we will.”
Robert Graves, head of pensions technical service at Rowanmoor, added that it does not make sense to tie up capital at this stage when there is no requirement to do so.
A person familiar with the situation told FTAdviser: “There are several well capitalised and strong acquisitive firms in the market.
“Numerous deals have already been done but of those that are left some are less attractive and will struggle to find buyers, and certainly not at the values the current owners place upon them.
“As we get closer to September 2016 I think you will see some more consolidation in the market but it might be on buyers, rather than sellers, terms.”
Last year, FTAdviser reported that a number of Sipp firms have been in talks with the regulator over their appetite for acquisitions of rivals ahead of the capital adequacy rules overhaul, following the regulator previously admitting that the new regulations could see one in five providers leave the market.
Mark Smith, a director at Mattioli Woods, said his business is currently having discussions with the regulator about possible solutions for troubled firms.
“Yes we have been approached to take on books - there are a number of Sipp operators that we are having discussions with and some of them are troubled operators and some of them are not.
“The regulator is aware we have done that before and we know how to deal with it.”
He added that there will be firms struggling to raise the capital needed without going to an external source. “The income they are generating won’t be sufficient to increase the levels of capital so they will need external funding. But if a Sipp operator is struggling why would someone put capital in that business?”
Previously, Mr Smith told FTAdviser that the FCA must change its approach to firms that fall foul of regulatory thresholds if it is to catalyse consolidation, and this is still his stance.
He highlighted that the difficulty is the two bits of regulation coming together - the FCA’s regulation of Sipp operators and HMRC overseeing the firm as a scheme administrator from a tax perspective.
Mr Smith added that some firms have more non-standard assets than others and, while some non-standard assets are “fine”, the firm’s options are limited in who would take on the book of business, as some providers simply do not accept non-standard assets.
