As part of the transaction, Tatton has entered a five-year strategic distribution partnership with Fintel which will provide it with access to 3,800 financial intermediary firms and its 6,000 Defaqto users.
In an announcement today (September 15), Tatton said the purchase of the funds supported the group’s strategy to grow assets under management, with the Verbatim multi-asset and multi-index funds adding approximately £650m to Tatton’s Aum.
The funds, which are currently managed by Liontrust, will see "no immediate changes", according to Tatton. The group said it will update the market in due course.
Tatton said the purchase and partnership significantly enhanced its “reach and distribution” to further contribute to the growth of its Aum.
Paul Hogarth, chief executive officer, said: "I am delighted to announce the acquisition of £650m of the Verbatim funds and this five-year strategic partnership with Fintel plc, a firm whose strategy and values are aligned with our own; keeping the IFA at the heart of our respective businesses.
"The transaction clearly demonstrates the progress we are making in executing on our growth strategy. We have set out a roadmap for growth over the next three years, growing our Aum organically and by acquisition and extending our reach to the IFA community, the lifeblood of our industry, through strategic partnerships.
“This transaction is evidence of that strategy in action and it enhances our proposition to IFAs and their clients further, with the multi-index and multi-asset funds complementing and extending our current fund range.”
This comes as in November Tatton secured a £30m acquisition war chest as it confirmed numerous deal discussions.
At the time, Hogarth told FTAdviser the company was interested in acquiring other funds and DFMs.
Earlier this year in June, Tatton also reported a 25 per cent increase in operating profit for the year to March 31, as it said activity was approaching pre-pandemic levels.
Today, Hogarth added: “We are excited to be working more closely with Fintel plc, a business we have known and respected for a very long time. I have no doubt that this is a fantastic opportunity for both businesses to continue to deliver against their strategic objectives, while delivering real shareholder value."
The investment manager said over the remainder of 2022, the partnership, including the Verbatim funds, is expected to generate adjusted operating profit of £0.6m, with adjusted operating profit of £1.5m expected for 2023, the first full financial year.
Around £2.8m has been paid in cash on completion, with the remainder of the £5.8m payable subject to certain performance conditions over the next four years.
The purchase is being funded from existing cash resources on the balance sheet and the group said post transaction, it will still have cash resources of £15m.
The firm said the technology from the deal provides insights and analysis which will enable targeted product design and distribution, allowing the group to have access to 2,500 fintech licences to distribute to Tatton and Paradigm firms and users.
sonia.rach@ft.com
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