Fairstone gets £25m injection of private equity cash

Fairstone gets £25m injection of private equity cash

IFA consolidator Fairstone has secured a multi-million pound investment from private equity firm Synova Capital.

Synova has become the lead investor in Fairstone by providing an initial capital injection of £25m as part of the deal, with more cash available in the future.

The transaction means several early stage shareholders in Fairstone have realised their investments and the company said they have all received substantial returns.

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Meanwhile Committed Capital, Northstar Ventures and two family offices have retained equity positions.

David Hickey, chairman of Fairstone, said: “From the outset it was apparent Synova had been tracking the business for some time, understood the sector, and already had a high degree of knowledge of the Fairstone business model and its existing growth trajectory.

“This transaction introduces very substantial expansion capital into Fairstone and the Board foresee a sizeable shift in the scale of the group’s activities.”

Lee Hartley, chief executive of Fairstone said the deal demonstrated his company’s appetite to complete more and larger buy-out deals over the short to medium term.

He said: “We are committed to working with high quality firms, with meaningful levels of assets under management, who want to drive their performance upwards and realise optimum value for their business.

Fairstone was founded in Newcastle in 2008 and has grown to include 260 financial advisers throughout the UK servicing 25,000 private clients with £5.8bn of assets.

In January Mr Hartley told FTAdviser he anticipated the company would be making between eight and 10 new acquisitions during 2016.

Alex Bowden, partner at Synova and newly-appointed director of Fairstone, said: “Widespread change across the financial services sector has paved the way for new and innovative business models like Fairstone to develop.

“Against the backdrop of ongoing professionalization and technological advances, exciting opportunities exist for quality operators to evolve into real market leaders.

“Fairstone already has a strong standing within the sector and now has one of the largest Chartered financial planning firms in the UK within the group.”

Fairstone is Synova’s first investment from its latest fund, Synova Capital Fund III LP and follows the exit of life sciences company Kinapse earlier this year for a return of 16 times its invested capital.