Investments  

New owner plans stand-alone future for James Hay

New owner plans stand-alone future for James Hay

Private equity owners who have just completed the acquisition of James Hay’s parent company intend to plough cash into the company’s Isa and general investment account (GIA) arms before separating out the business.

Private equity firm Epiris completed its takeover of IFG, the parent company of both self-invested personal pension (Sipp) James Hay and advice firm Saunderson House, in September.

Owen Wilson, a partner at Epiris who lead on the acquisition said the intention is to close the IFG business, and operate the companies as separate entities.

He said:  “One of the appealing things about IFG is that wealth management is a structural growth story. Both Saunderson House and James Hay are good businesses.

"Saunderson House is a business that gets a lot of customers from referrals and it will be very much business as usual. We intend to invest in James Hay's Isa and GIA products, and to grow them."

"We view them as separate businesses and we intend to run them entirely independently. In time, it will be two separate exits from IFG.

"We do not see a lot of synergies. IFG was at one time as many as 10 separate companies, but previous shareholders made a decision to sell those, and the two that were left are good businesses, but they do not have a lot of synergies.

"James Hay and Saunderson House will move out from underneath the IFG umbrella, with the group structure being phased out. One of the appealing things about IFG is wealth management is a structural growth story of those businesses."

The typical ownership period for a private equity firm is between three and five years, though the timing could vary.

IFG’s sale to Epiris for £206m was first announced in March 2019, and since then has been traipsing through the various regulatory and compliance stages. 

In April 2019, Saunderson House chief executive Tony Overy revealed that 60 per cent of the new clients coming to the firm were doing so through the discretionary fund management business the company launched in 2016.

IFG Group had previously spent £3m trying to sell the Saunderson House business.

Epiris inherited a number of legacy issues within the James Hay business, but has taken the view that it understands the nature of any problems and that the purchase price for the business reflects any potential risks.

The FCA recently ordered James Hay to set aside an additional £15m of regulatory capital as it continues to be in dispute with HMRC. The dispute centres on the investment by some Sipp clients of James Hay in  Elysian Fuels, and the subsequent tax reliefs claimed.

James Hay had previously set aside £20m to meet these potential liabilities. 

 david.thorpe@ft.com