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Adviser parent targets acquisitions after year of sales

Adviser parent targets acquisitions after year of sales

IFG Group, the Dublin-listed parent of platform and pension business James Hay and wealth manager Saunderson House, is on the hunt for new acquisitions after selling five businesses last year, its chief executive has told FTAdviser.

Speaking this morning (26 March) following the publication of the group’s annual results, Paul McNamara said that he was already in discussions over buyouts as part of a strategy this year to be more proactive with acquisitions and ‘strategic alliances’.

During 2014, a new management strategy saw a restructuring instigated that led to the sale of five advisory arms, while one small Irish general insurance business still in the process of being sold.

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Mr McNamara said this gave the firm a better focus on the two remaining core businesses in what it perceives to be fast-growing markets: high-end wealth manager Saunderson House which is benefitting from a drive to advice, and retirement planning platform James Hay Partnership.

“We simply had to be in markets that are growing and investing in businesses where we can get scale. I think we got some fair value transactions and took a prudent view of consideration in the results, with some still deferred until next year.”

He admitted that one of the two breadwinners had a better year that the other, with Saunderson House making a 13 per cent increase in adjusted operating profit to £5.4m, while James Hay’s operating profit fell to £5.8m from £8m in 2013.

Mr McNamara said that the wealth management business has a clear proposition, strong demand and an hourly charging structure that is very robust. “Their growth has also been driven by good recruitment and development of advisers,” he added.

Client attrition remains at less than 1 per cent and 247 new customers were added last year, equating to a 60 per cent increase compared to 154 in 2013 and 100 in 2012.

James Hay’s strategic development from a Sipp provider to a wider retirement platform proposition has required more investment, which dragged on profit levels last year and made the “bottom line more messy” said Mr McNamara.

“We undertook a lot of restructuring, putting money into technology and back office systems and working on the imminent launch of our discretionary fund management offering.”

He also mentioned the firm’s several executive changes, which “will stand us in good stead for future M&A activity”, including most recently the departure of chief operating officer Pete Burtonshaw earlier this week.

The upheaval has led to some adviser unrest as several business development managers exited recently, but Mr McNamara said that overall the IFA feedback to James Hay’s new strategy and pricing structure has been positive.

“Some at the margins might have felt they have lost a friend, but most of the advisers we’ve spoken to were looking for more direct access to the team, it has gone down well with the core.

“We’re also looking to get closer with larger IFAs, those that want to build scale and rather than just using us for Sipps, want a wider platform proposition,” he stated.