London & Colonial bought for £5.3m by Aim-listed firm

London & Colonial bought for £5.3m by Aim-listed firm

Cross-border financial services firm STM Group has bought pension provider London & Colonial for a consideration of up to £5.3m.

It makes London & Colonial the third self-invested personal pension to be snapped up this month, with Mattioli Woods buying MC Trustees and Praemium buying Wensley Mackay.

The board of STM Group, which is listed on the Aim, has said the deal will allow it to achieve one of the company’s “important strategic objectives” by entering the UK Sipp market.

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The deal includes a small book of Gibraltar based Qrops, together with a portfolio of Gibraltar-based life policies, which STM stated will give its life assurance operation a “significant step forward” in critical mass and economies of scale.

Alan Kentish, chief executive of STM, said: “London & Colonial is a very well respected name within the industry where there are a number of current opportunities that can be accelerated with STM’s resources and critical mass in the Qrops market.

“Not only does the acquisition get STM a foothold into the UK Sipp market, it also brings with it a number of bolt-on consolidations in the Qrops and life assurance business.

“These will bring STM further economies of scale and will potentially free up regulatory capital in the medium term to fuel further growth.”

STM has said that following the deal it will benefit from cost synergies and economies of scale of around £750,000 a year.

The statement said London & Colonial’s management team will remain in place following the deal.

Robin Ellison, chairman of London & Colonial Holdings, said: “We have over the years grown LCH in a forward thinking and innovative manner, and are delighted that STM share our vision of the future.

“We recognise that STM’s enviable distribution network will allow LCH’s businesses to flourish more quickly than could be achieved by LCH’s existing management and network.”

London & Colonial’s UK Sipp business has around 2,000 members and generates a turnover of around £1m.

The acquisition is subject to regulatory approval by the Gibraltar Financial Services Commission, with the approval from the Financial Conduct Authority having already been received.

On completion £4.1m will be paid with up to a further £1.25m payable in three stages over the following year, subject to conditions.