Neil Stevens, joint CEO at Fintel, said the firm will be more active in the acquisition space in 2023 after it put off buying for several years.
In its half year results published last week (July 27), Fintel announced the completion of two tech firm acquisitions as it looked to expand its adviser capabilities.
The firm announced the purchase of Micap by subsidiary business Defaqto and Competent Adviser via Fintel IQ, a newly formed technology and knowledge platform.
Micap provides independent research and advice tools for tax advantaged investment products.
Fintel said the deal will extend Defaqto’s reach into the tax-advantaged market, expanding its data footprint and research capabilities.
“We're continuing to make really fantastic progress to the scale of the business as we grow our customer base and develop more products for the market,” Stevens said.
“Today we support over 10,000 individual IFAs and around 3,000 mortgage brokers so we are, by quite a margin, the biggest support services distribution group in UK retail financial services.
“I believe we've achieved that position by being obsessive about thinking about the needs of our customers, and how we can give them software solutions, data to make their lives easier, and to be more productive and more successful.”
He argued that the two acquisitions give Fintel “a good jump forward in that regard".
We've been developing a pipeline of acquisitions, and this isn’t the last you’re going to see from us.“We're bringing two new businesses onto our platform and that's going to help us extend the service to all of our existing customers,” he said.
Fintel made its biggest acquisition to date back in 2019 when it bought Defaqto.
Soon after, in 2021, The SimplyBiz Group rebranded to Fintel as it looked to become a "house of quality brands" in the financial services market.
“We took the right amount of time to bring that together and form Fintel as a new group, which has been a tremendous success,” Stevens said.
Over 2021 and 2022, Stevens said Fintel did not think it was a great market to be acquiring as prices were inflated.
“There was a lot of technology being marketed for sale but didn't really demonstrate its value and worth to any customer,” he said.
“So we kind of sat quiet for a bit and carried on growing organically. 2023 is different for us.”
Stevens said the market is more sensible now and the firm has been much more active coming into this year.
“We've been developing a pipeline of acquisitions, and this isn’t the last you’re going to see from us.
“We think it's a good time now to be developing the group and bringing businesses into our platform. What we look for are businesses that have proven technology, adds value and has a good customer base. [Also business that] really want to grow, want investment for growth, and want to put new products and capabilities out as well.
“There's lots of great things out there that are going to keep us busy.”
New acquisitions
Looking at the recent deals, Competent Adviser is a platform which helps advisers meet increasing regulatory requirements.
This acquisition has been ongoing for about four months, according to Fintel.
This purchase was completed in July 2023 and funded entirely from cash reserves with upfront cash consideration of £2.5mn.
We the industry can make the advisers’ job a lot easier by connecting data and having consistent workflows and that’s our mission.Stevens said: “The team at Competent Adviser are really excited to connect other capabilities, because we've got other services that will help their customer base. So as we build this bigger platform, different customers can come onto our platform and get connected modules for exactly what they need.”
Elsewhere, he argued that Defaqto is “the market leader for research” in financial services but the world has developed with lower returns, higher inflation rates and higher cash returns causing investors to look more carefully about yield or return on investment.
“We saw the Mansion House speech where pension funds have been encouraged to push more of their investments into non mainstream asset classes to try and kickstart more innovation, faster growth in the economy, and to protect returns as well,” he said.
“The same thing happens for private clients and financial advisers who need high quality research on non mainstream investments, such as VCT, EIS and inheritance tax planning, and Micap is the leader in that field.”
Stevens said when you put that alongside Defaqto bringing all that data together into the platform, it is great for advisers to be able to offer their clients a holistic service going forward.
“When we bring businesses in, it's with the ambition to grow and develop them,” Stevens added.
“We really want to find companies that have proven the value to intermediaries and we want technology and software that demonstrate they make an advisers’ job easier, help them do more for their clients, manage regulatory risk, and build a more successful business.”
He explained that this is one area that is really important to Fintel, to get those technologies or services.
“The more things we connect up for advisers, the easier it is for them to use because they're not putting data into 10 different systems, or using different models to give investment advice to long term planning,” he added.
“We can make the advisers’ job a lot easier by connecting data and having consistent workflows and that’s our mission.”
sonia.rach@ft.com
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