FNZ acquires minority stake in Embark

FNZ acquires minority stake in Embark

Platform software provider FNZ has taken a minority stake in Embark Group as the firms announced a five-year extension to their existing commercial partnership. 

FNZ was the sole participant in a small rights issue by Embark, which saw it acquire a 9.1 per cent stake in the platform and Sipp provider. 

As a minority shareholder, FNZ will have an interest in the growth of the Embark business, but the investment "does not carry any operation involvement, control, or oversight", according to Embark. 

Alongside the investment, FNZ and Embark have renewed their ten-year commercial partnership for the platform technology and administration services following a half term review. 

Adrian Durham, group CEO of FNZ, said: "We contracted in late 2013 with Embark when they were a small start-up player.

"We liked their ambition in the key retirement space and how they saw the platform market developing. Today they have over £15bn in Aum, much of which sits on our technology.

"They have solid distribution relationships and the right proposition for the UK market, and we believe will emerge as long-term winners in a competitive sector."

Phil Smith, group CEO of Embark, added: "FNZ has emerged as the leading platform software provider in the UK and internationally, but also proven themselves to be exceptional partners to the Embark Group.

"Their support has enabled us to put platform solutions behind large parts of the ‘robo’ and retail banking markets for pensions, whilst also facilitating our competitive disruption of the IFA wrap space.

"As the group continues to grow, it is essential we have long-term certainty in our technology pricing, development cycle and execution support. This renewal achieves these goals."

Embark launched its own platform, powered by FNZ and aimed at both advisers and private clients, in November 2017 after a period of rapid expansion.

The group, which is eyeing an IPO for 2020, had seen its total revenue increase by 59 per cent to £29.2m during the year, and an increase of 31 per cent in its clients numbers to 114,000.

FNZ meanwhile provides the technology behind a number of adviser platforms, including the troubled Aegon and Aviva platforms.

Both providers experienced immense problems during their replatformings last year, reporting service outages and glitches lasting for weeks.

Scott Gallacher, chartered financial planner at Rowley Turton, said: "Given the problems others have experienced implementing platform changes, it’s not really a surprise that Embark have decided to take the sensible approach of extending their existing platform relationship with FNZ."

FNZ is also involved in the looming migration of the Quilter platform and it has stakes in other adviser service providers, such as technology start-up Advicefront.

In October the £1.65bn company was bought from its private equity backers in what it said was one of the world's largest fintech transactions in the year. A third of the business is still owned by FNZ's employees.