STM Group has acquired both Berkeley Burke’s small self-administered scheme and international pension businesses in a deal worth up to £2.9m.
In an update to the stock exchange, published today (August 13), STM announced it had acquired 100 per cent of the share capital of Berkeley Burke (Financial Services) Ltd and Berkeley Burke Employee Benefit Consultants Ltd, which provide administration and consultancy services to Ssas and international businesses.
The two acquired businesses are independent of the Berkeley Burke Sipp business, which was sold to Hartley Pensions after it entered into administration in September last year.
According to the announcement, each of the businesses have annual recurring revenue of approximately £1m and staff will be retained.
STM will pay a maximum of £2.9m for the acquisition, which is not subject to regulatory approval. The deal will see an initial instalment of £1.4m, with the remaining £1.5m to be paid subject to performance targets being met.
The company has also secured approval from the Royal Bank of Scotland for a £5.5m credit facility to be used purely for acquisitions.
According to STM, taking into account initial costs and its integration plan, the acquisition is expected to break even in the first year after which it will make annual profits of £600,000.
All of the acquired businesses will be integrated into STM’s subsidiary Options UK, formerly known as Carey Pensions.
Christine Hallett, managing director of Options UK, said: “This is great news because it will significantly strengthen our position in the UK market, and it’s an important development in our growth strategy based on offering advisers and their clients a genuine, solutions driven service to help them plan for their tomorrow.”
According to STM, the Ssas business will “allow for efficiency gains when it is integrated into our existing UK operations”, and the UK and international group pension plan business will “strengthen its position in that sector” as well as STM's pension offerings in Malta and Gibraltar.
Alan Kentish, chief executive officer of STM Group, said: "We are really pleased to get this acquisition under our belt; it has been a long time coming but we needed to find the right acquisition for us.
“The Ssas and GPP businesses fit nicely within our existing operations and complement some of our imminent expansion plans in the international pension space.
“I am delighted to welcome Grahame Berkeley (chairman and majority owner of the Berkeley Burke businesses), who will act as a consultant to the business for the foreseeable future, and his dedicated staff to the STM family.”
In September last year, Berkeley Burke’s Sipp business, Berkeley Burke Sipp Administration Limited, went into administration because it was unable to cover the financial costs of defending claims made against it in respect of the firm's alleged due diligence failings when accepting high risk investments between 2010 and 2012.
The Sipp provider was embroiled in a Financial Ombudsman Service decision from 2014 in which it was ordered to compensate a client after it failed to carry out adviser-style due diligence on his investment.