UK's Tavistock Enters Agreement To Acquire Financial Advisor Firm, Boosting AuM Sharply

Tom Burroughes

19 January 2015

UK-based financial advisory and investment firm Tavistock Group, which is quoted on the London stock market, has entered an agreement to purchase Standard Financial Group, a similar business, creating a firm with a combined group of more than 300 financial advisors.

The conditional contract would also propel the enlarged business into the top 10 of such firms in the UK and give it a client base of 65,000 people, with turnover of more than £30 million and assets under advice of over £3 billion from the current level of £400 million.

Standard Financial Group is the holding company of a financial advisory business operating mainly through its regulated subsidiary, Financial Limited.

The purchase is subject to shareholder and regulatory approval.

Tavistock also announced that it has conditionally raised a minimum of £2.7 million to provide additional regulatory and working capital for the acquisition, through a placing of 135 million new ordinary shares at a subscription price of 2 pence per share and an open offer of up to a further 30,455,624 new ordinary shares. Senior management of both Tavistock and Financial have invested a combined £500,000 in the placing, today’s statement said.

Tavistock said much of its growth is likely to be driven by acquisition activity although there remains “significant opportunity” to grow organically.

The acquisition’s size relative to the company makes the transaction a reverse takeover under the AIM rules for companies and as such requires the approval of shareholders. This will be sought at a general meeting on 12 February 2015.

Financial’s current management team, including Brian Galvin, managing director, will retain their roles within the enlarged advisory business.

Difficulties

Financial Limited has been through a difficult period before more recent restructuring. Last July, subsidiaries of Financial Group escaped fines of more than £13 milion from the regulator for failing to have adequate controls in place over appointed representatives. The Financial Conduct Authority said Financial Ltd and Investments Ltd failed to ensure ARs and advisors were adequately supervised and controlled to minimise the risk of mis-selling and the provision of unsuitable advice to consumers.