The saga of M&A deals in UK and European wealth management continues.

Tilney Bestinvest is to acquire fellow UK wealth management house Towry, continuing a round of merger and acquisition activity in the country's sector and confirming recent media speculation that Towry could be sold.

The acquisition is from Towry's majority shareholder Palamon Capital Partners for £600 million. The acquisition, which is subject to regulatory clearances, will create a combined business with more than £20 billion ($28.4 billion) of assets for affluent and high net worth clients.

The enlarged Tilney Bestinvest group will continue to use the Towry, Tilney and Bestinvest brands in different parts of the market while a review of future branding is undertaken, a statement from TilneyBestinvest said.

Peter Hall, chief executive of Tilney Bestinvest, will lead the combined group.

The combined business comprising over 240 financial planners and 120 investment managers will operate from a network of more than 30 offices across the UK, the statement said.

The majority of the assets will be managed with over 80 per cent. in discretionary investment management services. Over 40 per cent. of assets will be managed for clients with over £1 million.

“This is a transformational deal that will position the combined group as one of the leading UK wealth management firms providing both financial planning and investment management services," Hall said.

Reforms by the current UK government to pensions, giving people more freedom on how to invest their pension pots, as well as changes to inheritance tax treatment of retirement portfolios, have created new market opportunities, Hall said.

M&A trend

The transaction is a further twist in the merger and acquisition trend seen in recent years, in part because of a need for firms to obtain economies of scale to deal with rising regulatory burdens. Deals have included the move in March by Paris-listed Societe Generale to agree a share purchase with European banking group Oddo & Cie to acquire all of Kleinwort Benson and Kleinwort Benson Channel Islands Holdings, BHF Kleinwort Benson Group's UK and Channel Islands wealth management business.

Other M&A deals have included the purchase by Geneva-headquartered SYZ Group of the Swiss wealth arm of Royal Bank of Canada, while Julius Baer has agreed to acquire Commerzbank International SA Luxembourg. In November last year, Banque J Safra Sarasin agreed to acquire Bank Leumi’s Luxembourg private banking business for an undisclosed sum. According to a recent study by Scorpio Partnership, the consultancy, there were a total of 124 deals last year - the largest number in the eight years it has tracked this activity.

Philip Muelder, Partner and co-head of the Financial Services team at Permira, added: “Since acquiring Bestinvest only two years ago with assets and revenues of £5 billion and £39 million, the Permira Funds have backed Peter Hall and his team to build one of the largest and fastest growing players in the UK wealth management market. The business has achieved this through a series of highly synergistic acquisitions and strong organic growth, which will be further enhanced by its recently launched joint venture with Saga. With over £20 billion of assets and £200 million of revenues once Towry is acquired, the group will have the scale to continue to invest to enhance its range of services for clients and will be well positioned to take advantage of the increasing demand for advice which presents significant growth opportunities.”

Towry was advised on the transaction by Evercore and Tilney Bestinvest was advised on the transaction by Citi.