Nucleus sold to a new PE firm

Nucleus sold to a new PE firm
Photographer: Chris Ratcliffe/Bloomberg

HPS Investment Partners has bought a majority stake in Nucleus for an undisclosed amount - less than a year after it was bought by private equity-backed James Hay.

In an announcement today (March 29), Nucleus confirmed HPS was now a majority shareholder and that its existing shareholder Epiris - James Hay's parent company - would retain a "significant minority stake".

Nucleus stressed there was "no change" to the strategy, the business model or the management team as a result of the change in ownership.

Richard Rowney, Nucleus's chief executive, said: “It has been obvious from an early stage that [HPS’s] ambition for the business and commitment to support me and my management team to grow the business meant we are all completely aligned.

“While today’s news will not result in any immediate practical change, it is certainly a vote of confidence, not just in our strategy, but also in our people - the 650 dedicated colleagues who make up our business, with a sole focus of supporting advisers, and helping them make retirement more rewarding for their clients.”

Epiris announced it was buying Nucleus in February 2021 for £145mn. The deal was eventually signed off in August 2021. The value of James Hay and Nucleus combined sits at around £700mn. The group’s combined assets on the platform sit at around £50bn.

Since Nucleus became part of the enlarged group, around £5mn has been invested into its service and £6mn committed to platform development for this year.

Jennifer Ellis, an adviser and founder at Wellington Wealth, said it was important that any large private equity firm examined why Nucleus became successful with advisers in the first place.

"It was largely down to culture and people as well as a client focus. Any provider will win business if they can deploy this correctly and change the poor perceived image of the finance industry. Advisers and planners are at the coal face looking people in the eye," she told FTAdviser.

"Providers have become detached from the end client. However, the new Financial Conduct Authority consumer duty should focus them on what matters to the clients or the end user as nobody should forget who pays the wages in this industry or who we are privileged to serve."

Mark Polson, principal at the Lang Cat, said today's news was "not that big a deal" saying that the combined Nucleus Financial Platforms Group now has another significant shareholder.

He added: “Operationally, so far as I can see, the strategy of rehabilitating James Hay with a move to a new platform, with Nucleus continuing to run in a steady state for now, is unchanged.”

 But behind the scenes, Polson said there were two interesting things to note.

“Firstly, the combined group is a big business now – perhaps the fifth biggest intermediated platform business in the UK – and so having more firepower on the shareholder register is probably a good thing.