Options owner buys Mercer’s UK Sipp portfolio for £3mn

Options owner buys Mercer’s UK Sipp portfolio for £3mn
Jason Alden/Bloomberg

The parent company of Options Pensions, formerly known as Carey Pensions, has bought the UK pension portfolio business of US asset manager Mercer for £3.34mn.

STM plans to complete the deal, which is being funded by a mixture of existing finance and a debt facility, by the end of August.

The acquisition includes Mercer’s UK self-invested personal pension and small self-administered pension portfolios.

Because STM is acquiring the portfolio, net assets and trustee companies, not the regulated entities, no regulatory approval is needed to greenlight the deal.

The deal amount includes £1mn in net assets, primarily made up of fees yet to be collected from clients, and a network of intermediary relationships which have introduced clients to Mercer.

In an announcement today (July 26), STM said the deal will “double” the revenue generated from its UK personal pensions business - Options Pensions - adding some 2,100 Sipps and 700 Ssas'.

“[t will] provide a solid platform for scalability, particularly for our Ssas operations, and efficiencies going forward,” the company said.

Options UK managing director, Christine Hallett, said: “The acquisition of the Premier Pensions portfolio and team will complement our existing product offerings in the UK Sipp and Ssas markets. It also means that we will have access to an expanded network of intermediaries that have introduced clients to Mercer.”

Mercer’s UK pension scheme portfolio posted £870,000 in earnings last year and is expected to contribute the same earnings in 2022, according to the deal announcement.

The business was previously acquired by Mercer as part of the US asset manager’s own acquisition of JLT.

STM intends to keep all the portfolio business’ staff and its Cardiff office. The portfolio itself will be integrated into the business over a phased 12-month period.

Chief executive of STM, Alan Kentish, said the deal allowed it to implement an integration plan which can “dovetail with our overall plans in relation to changing our operating model to improve our margins, post significant investment in our IT infrastructure”.

The acquisition has cost STM £600,000 in transaction and integration costs, meaning it will add a negative contribution of £300,000 to the firm’s financial results for the four months to December.

Last year, STM said its revenue had taken a hit due to delays with new business revenues materialising. In an effort to push up revenues, it got rid of its chief operating officer to make savings for business development.

The firm has also had to set aside £3.6mn so far to deal with possible future claims following the trial of a case where then-named Carey Pensions, which it acquired in February 2019, was alleged to have mis-sold a customer a Sipp.

Hundreds of Financial Ombudsman Service complaints were filed against now-named Options UK Personal Pensions last year.