The deal, which is subject to regulatory approval, will see Tatton AM purchase the share for a total consideration of £7mn, with an option to acquire a further 50 per cent in due course.
8AM is an investment manager primarily focussed on delivering risk-profiled model portfolios and a small range of multi-manager funds.
Tatton AM said the DFM’s model portfolios and funds will complement its existing proposition.
The proposed acquisition will provide IFAs’ clients access to an extended range of risk profiled investments and on completion, it anticipates 8AM’s assets under management to be around £0.8bn.
Paul Hogarth, chief executive officer at Tatton AM, said: “The business complements our existing offering and brings with it an experienced and motivated management team who are well known to us and culturally aligned to the values of the group. We are very much looking forward to working with them.
“Post completion, this will be the second acquisition in less than a year for the group, demonstrating that we are executing on our three year “roadmap to growth” strategy.”
Hogarth said with a three-year target of £6bn of growth in AUM, it remains on target to achieve this at the end of the first year.
“This year we have grown organically by £1.7bn and acquisitions to date have contributed a further £0.6bn, a total contribution of £2.3bn towards the target and on completion 8AM will further enhance this number,” he said.
“We look forward with confidence as we make further progress and continue to deliver against our strategic objectives.”
Meanwhile, Jeremy Nunn, managing director of 8AM Global Limited, said: “We are delighted with the proposed sale of 50 per cent of the share capital of 8AM to Tatton Asset Management plc. The sale will allow 8AM to build on its success and provide us with access to the know-how and expertise of one of the market leaders in the MPS space.
“It will act as a springboard for the growth of our assets under management and provide advisers and investors with the comfort that the development and resilience of the 8AM products will continue to be at the forefront of our plans.”
Full year results
The purchase announcement today (April 20) came alongside its unaudited trading update for the year ended March 31, 2022.
The firm saw Aum increase by 26.1 per cent over the year to £11.3bn, up from £8.9bn last year.
Tatton Investment Management had “a strong performance” in the second half of the year with net inflows of £0.62bn, an average of £106mn per month.
The total inflows for the year were £1.27bn, up from £0.75bn last year and an increase of 14.2 per cent on the opening Aum.
In September, the group announced its acquisition of the Verbatim funds from Fintel, SimplyBiz's parent company, for £5.8mn.
The acquisition of the Verbatim funds added £0.65bn and market returns contributed a further 4.7 per cent or £0.42bn.
Hogarth said: “The group has delivered another good year of growth across both divisions and I am particularly pleased with the significant increase in net new inflows to the group which underpins the organic growth opportunity that exists in our market.
“The last quarter was a difficult environment from a geopolitical and economic perspective, but we demonstrated the resilience of our business model maintaining robust net inflows and finished the year strongly with £11.3bn of Aum.”
Paradigm, which is the membership operating division of Tatton AM, consisting of consultancy support for IFA, wealth and mortgage and protection firms, saw its member firms increase to 421, up from 407 in 2021.
Mortgage firms increased to 1,674 from 1,612 and the group said mortgage completions remained strong following the end of the government’s stamp duty reduction in September 2021 with over £6bn of completions being delivered in H2 FY22.
Total completions for the year increased by 13.3 per cent to £12.8bn, up from £11.3bn.
Hogarth added: “Paradigm also delivered a pleasing year, in particular mortgage completions remained strong despite the removal of government incentives and a changing market landscape."
In November, Tatton Asset Management reported its pre-tax profit rose by nearly £2mn in the six months to September 30, after a string of acquisitions and new partnerships. The firm saw a profit of £4.8mn, up from £3mn in the same period last year.
sonia.rach@ft.com
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