Interactive Investor has bought the Alliance Trust Savings platform at a discount price.
The direct-to-consumer investment platform paid £40m for Alliance Trust Savings, a price that includes the company’s office in Dundee.
Alan Brierley, investment trust analyst at Cannacord Genuity, said the price the platform and the office building were valued at in Alliance Trust's most recent accounts was £42.9m, with the platform valued at £38m and the building at £4.9m
Alliance Trust had previously written down the value of the platform and the discount is greater than the 6 per cent discount to net asset value at which Alliance Trust shares presently trade.
Mr Brierley said: "The board has previously advised that they would seek to simplify the business model and realise value from non-core assets. This transaction further streamlines the investment proposition and accordingly is a welcome development.
"The past 18 months have been transformative for Alliance. The company has adopted a unique and innovative approach to global equities, which features high conviction and genuine active management.
"Although still early days, the initial performance has been encouraging with the equity portfolio generating a total return of 18.1 per cent versus a MSCI ACWI total return of 16.4 per cent.
"We believe the company has put in place strong foundations on which to build; if Alliance can sustain this superior performance record, then we would expect returns to be enhanced by an improvement in the rating, which continues to be more a function of legacy issues than undoubted potential."
The money raised will be reinvested in Alliance Trust's global equity portfolio, which is overseen by Willis Towers Watson which selected eight fund managers to run individual equity portfolios.
Alliance Trust Savings represents 1.3 per cent of the trust's portfolio and following the deal the total value of the non-core assets held in the Alliance Trust portfolio is 0.48 per cent, or £13.4m of the £2.85bn of the total assets in the trust.
Lord Smith of Kelvin, chairman of Alliance Trust, said: "The two businesses are highly complementary and ATS customers, many of whom are Alliance Trust shareholders, will benefit from Interactive Investor’s similar low flat-fee structure, as well as its increased scale and focus.
"A key consideration for the board was a commitment to maintaining ATS' presence in Scotland. We are therefore very pleased that Interactive Investor plans to invest in ATS’ Dundee operating centre."
After the deal goes through II, which is majority owned by JC Flowers, will have assets under administration of £35bn and 400,000 clients.
It comes after II's acquistion last year of TD Direct Investing and FE's Trustnet Direct platform.
Richard Wilson, chief executive of Interactive Investor, said: "This is another important step in our ambition to build the UK's best investment platform. The acquisition brings together the country's two largest fixed price providers, adding significant scale to II, and reinforcing our ability to deliver excellent choice, value and service to all our customers."
david.thorpe@ft.com
