Punter Southall Group  

Xafinity buys rival as profits soar

Xafinity buys rival as profits soar

Xafinity has announced it is buying the actuarial consulting, pensions administration and investment consulting of rival business Punter Southall as tax profits triple.

The company posted profits of £4.9m in the first half of the financial year, up from £1.7m in the same period last year, a 188 per cent increase, on revenues of £26.6m, up 2 percent on H1 2017.

During the period the firm added five annuity clients, the revenue from which is expected to feed through over the remainder of this financial year, it said in its interim results out on 7 December.

It also introduced its Radar technology to 40 clients since beginning of financial year.

Ben Bramhall, co-CEO of Xafinity, said: “The company’s performance since 31 March 2017 has been pleasing, and I would like to thank all of our employees for their hard work as the business continues to build momentum as a publicly listed company.”

Meanwhile, the company has announced it is buying the  actuarial consulting, pensions administration and investment consulting businesses of Punter Southall group for up to £153m.

The deal will combine the three target businesses with Xafinity’s existing businesses, while Xafinity’s HR Trustees business will be sold to the PS group. 

Xafinity will pay £92.5m in cash and issue 25,766,871 completion shares, while the sale of the HR Trustees business is expected to generate a further £8.5m towards the deal as well as issue 6,134,969 earn out shares.

The acquired PS division comprises two businesses providing actuarial advice to the trustees and employer sponsors of about 425 UK occupational pension schemes and administering pensions for 380,000 scheme members belonging to about 200 UK occupational pension schemes between them.

The additional investment consulting business provides specialist consulting services, including investment strategy, risk management and investment governance, to the trustees and employer sponsors of about115 UK occupational pension schemes.

The group reported £51m in revenue and adjusted earnings of about £11m in the year ended 31 December 2016.

The acquisition is awaiting shareholder' approval and is expected to complete on 11 January 2018.

Paul Cuff, co-CEO of Xafinity, said: “The announcement today regarding the transaction with Punter Southall is very exciting news for everyone at Xafinity, and it follows a successful period for the company built on the back of a series of impressive client wins. 

“We have a very clear strategy to build market share in the pensions advisory space, and the merger of these three divisions from PS group with Xafinity will enable us to achieve our aim of becoming the clear alternative to the Big Three in the pensions consultancy sector.” 

The investment consultancy industry is currently being scrutinised by the Competition and Markets Authority (CMA) over competition levels in the sector.

Mr Bramhall said: "We fully support the regulator's decision to explore ways in which the industry can work more effectively. We believe this investigation will be hugely beneficial to pension schemes and trustees, and we look forward to sharing our recommendations with the CMA on how the industry can improve.”