Tilney Smith & Williamson  

Tilney secures funding for Smith & Williamson takeover

Tilney secures funding for Smith & Williamson takeover

Tilney's proposed takeover of rival firm Smith & Williamson is back on the table after the wealth manager secured more than £250m in funding from a US-based private equity investor. 

In an update this morning Tilney confirmed a revised structure had been agreed for the merger, which hit regulatory hurdles earlier this year when the Financial Conduct Authority refused to approve the deal.

The takeover has now secured additional backing from private equity firm Warburg Pincus in a move Tilney said would "significantly" reduce external debt for the combined business, lower ongoing financing costs and improve its regulatory capital position. 

FTAdviser understands US-based Warburg Pincus is putting more than £250m behind the merger, which is its sixth investment in a wealth management company.

When the deal was first announced last September it was reported Tilney would be paying £625m for its rival, in a deal which would see the combined business manage £44bn in assets and generate an estimated £530m in revenues.  

In April Smith & Williamson warned the global coronavirus pandemic had pumped the brakes on the merger, but following today's announcement the deal is expected to complete in the second half of 2020.

David Cobb and Kevin Stopps, co-chief Executives of Smith & Williamson, said: "The revised structure retains both these strategic benefits, as well as value for our shareholders, and delivers a more robust financial structure and a strong additional partner for the future in Warburg Pincus. 

"It is testament to the outcome that we have been striving for and the strong working relationship between all parties that we have been able to reach this agreement despite the Covid crisis." 

Warburg Pincus will invest alongside funds already agreed with London-based private equity backer Permira and Smith & Williamson’s largest shareholder, AGF, will fully exit its investment in the group upon completion of the deal. 

Chris Woodhouse, chief executive of Tilney, said: "I am delighted that we have agreed terms on a revised transaction structure. This transformational deal brings together two highly complementary and successful businesses, with shared values of focusing on our clients and high standards of professionalism.

"The compelling rationale has been further validated by Warburg Pincus making a significant investment in the business against the backdrop of a major global health crisis and related challenges in the economic environment.

"This is a real vote of confidence in what we are building and its prospects. Integration planning is well advanced and we look forward to progressing the deal through to completion in the coming months."

rachel.mortimer@ft.com

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