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Embark raises £39.4m from investment giants

Embark raises £39.4m from investment giants

BlackRock, Legg Mason, and Merian Chrysalis Investment Company have invested almost £40m in retirement company Embark Group.

The three investment companies participated in a capital raise worth £39.4m, with £24.5m funded by BlackRock and Legg Mason and £14.9m provided by Merian Chrysalis.

Following the investment BlackRock and Legg Mason will each take a 9.9 per cent stake in Embark with Merian Chrysalis taking a 19.9 per cent stake. However, none of the parties will have a seat on Embark’s board.

To accommodate this non-executive director Richard Wohanka will reduce his stake by 25 per cent to hold just over 15 per cent in the group.

Embark plans to use the funding to develop its technology and buy further firms.

Phil Smith, Embark's chief executive, told FTAdviser: "[With the new capital] we will invest into our workplace wrap business, a joint partnership with accountancy firm Mazars, which will see a lot of activity over the next two or three years.

"We will  also marginally invest in our existing tech suite. It is still quite new so we don’t need to put a huge amount of money into it."

He added: "At the rate we are growing we need to put people, capital and infrastructure behind the business. If the right value opportunity pops up organically, we are ready and prepared to move quickly. 

"We are not out actively looking for opportunities and will not throw money in the mergers and acquisitions market but we will move opportunistically if things pop up."

According to its annual results, published yesterday (July 4), Embark reported a profit of £1.7m for the 2018 calendar year, compared with a loss of £1.6m for the previous year. Total assets under management at the firm rose by 29 per cent to £14.7bn. 

The company’s announcement stated that it continues to assess acquisition opportunities, having most recent acquired Option Sipp in 2018. 

The company added 12,000 clients during the year, excluding clients that came via acquisitions. The total number of clients the firm has was 140,000 at the end of 2018. 

Assets under management at the firm have risen to £15.2bn at the end of May, and client numbers have risen to 147,000. 

Mr Smith said: "The capital raising represents a significant step in our ambition, capacity and capability to be a major force in digitally led retirement and savings sector. 

"Capital is central for continued steady growth but partnering with major global players who have a fully aligned vision of the future requirements across the financial advisory, direct and workplace channels, is of huge benefit."

In April, Merian Chrysalis raised £100m for further investments via a placing bid after originally asking for £50m.

Merian Chrysalis is an investment trust run by Merian Global Investors, a global investment company worth £28.9bn. 

Richard Watts, portfolio manager at Merian Chrysalis, said: "The retirement and savings market is going through a period of unprecedented change, with tech-enabled providers leading the charge. Many traditional players have failed to respond to the transition and are now falling behind.