Acquisition of Fundsdirect and Ascentric Wrap

Royal London has announced its intention to purchase the entire issued and to be issued share capital of Investment Funds Direct Group Limited (“Fundsdirect”) the company behind the successful Ascentric wrap platform. Completion of the transaction is subject to the approval of the Financial Services Authority.

Royal London has posted an offer in respect of which it has received irrevocable undertakings to accept for around 85% of shares. Royal London is therefore confident that it will be able to complete the acquisition as planned. The overall cost of the acquisition is not being disclosed. Part of the investment will be used as working capital to support growth in the Fundsdirect business and to accelerate further development of the Ascentric platform, so enhancing the user proposition.

Fundsdirect was founded in 1982 and launched the first web-enabled fund supermarket in 1999. It is currently owned by a combination of its management, certain IFA firms and private investors. The company administers funds in excess of £450 million and is growing rapidly. Clive Boothman (non-executive Chairman) and Hugo Thorman (Managing Director) will remain with the company, as will the rest of the management team. Following completion of the transaction, management and employees of Fundsdirect will be provided with incentives linked to the value of the business.

It has become evident that many IFAs do not like the restricted platforms offered by some product providers, preferring the whole of market alternative which is provided by Ascentric. Royal London sees this strategic acquisition as an excellent opportunity to widen its offering to the IFA market and to support a “whole of market” approach.

Royal London believes there will be increasing regulatory pressure to ensure there is clear disclosure of costs on wrap products and fund supermarket platforms, and Ascentric is widely recognised as being at the forefront of the market in relation to the transparency of charging structures.

Commenting on the acquisition, Mike Yardley, Group Chief Executive of Royal London, said: “We have recognised the increasing importance of wrap platforms to the IFA market and the potential for considerable growth over the next few years. Fundsdirect has already established good market presence with a strong and well-respected management team and a robust and scaleable proposition. With the financial backing Royal London will provide, we believe it is in an excellent position to significantly increase its share of this rapidly growing market.”

Fundsdirect will continue to be run by its current management team as an operationally autonomous business within the Royal London Group. Royal London will appoint two non-executive directors to the Fundsdirect board. Fundsdirect will benefit from access to some of Royal London’s specialist centralised functions, for example IT, Risk & Compliance and Legal services.