Tavistock Investments has sold its discretionary fund management arm as it signed a 10-year strategic partnership with Titan Wealth Holdings.
Titan acquired Tavistock Wealth for up to £40m in cash, together with a ten-year earn out.
Tavistock currently has approximately £4bn of funds under advice, with Tavistock Wealth accounting for £1bn funds under management.
The firms' partnership will see Tavistock act as Titan’s retail distribution partner.
Tavistock will receive payments over a ten-year period equivalent in value to 50 per cent of future net income on any increased funds under management within Tavistock Wealth’s Acumen Ucits funds.
Additionally, a new company within the Tavistock Investments Group, Tavistock Asset Management, will continue to market the group’s centralised investment proposition which will include both the Acumen Ucits funds and the company’s model portfolio service.
Tavistock Asset Management will retain Titan as investment manager for the MPS.
It will also embark on an acquisition programme, the contribution of which will significantly outweigh the loss of Tavistock Wealth’s contribution to Tavistock in the short to medium term, it said.
The sale of Tavistock Wealth to Titan is subject to regulatory approval as well as formal approval by Tavistock’s shareholders.
However, Tavistock said it has already received backing from shareholders holding 50.56 per cent of the company’s issued share capital.
Brian Raven, Tavistock’s chief executive, said: “This is a great opportunity for both companies.
“Whilst Tavistock Wealth is becoming part of Titan, we will still be working closely with our highly successful investment team.”
He added: “The partnership with Titan endorses our corporate strategy and will enable us to accelerate the growth of our business and deliver maximum value to our shareholders.”
Following approval, Titan will have assets under management and administration of £3bn.
In addition to acquiring Tavistock Wealth, Titan has acquired platform provider Global Prime Partners which provides services to institutional clients and fund managers with £2bn in assets under administration.
The firm said both of the businesses will operate under the Titan holding group and retain their existing model and leadership.
Titan said it is in discussions regarding the acquisition of six other DFMs.
James Kaberry, executive chairman at Titan, said: “We are excited to partner with Tavistock and look forward to a successful future together.
“We have been impressed by Tavistock’s leadership team, the business that they have developed, and the outstanding investment funds run by Tavistock Wealth.”
In its results for the year ended 31 March 2020, Tavistock Investments reported a "strong close" to the financial year with gross revenues of £24m, following an extensive reorganisation project and cost-cutting measures.
Tavistock Wealth reported a pre-tax profit of £2.3m from gross revenues of £5.6m and gross assets of £5.2m.
sonia.rach@ft.com
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