Permira, the private equity giant, has acquired Bestinvest, the UK wealth manager and online investment service.

In a move highlighting alternative investment firms’ ownership of some UK wealth  businesses, Permira, one of the world’s biggest private equity houses, has acquired Bestinvest, the wealth manager and online investment service, for an undisclosed sum.

The transaction, which is subject to regulatory approval, is expected to complete in the first quarter of 2014, according to a statement from Bestinvest today. The firm has a total of £5 billion ($8.1 billion) of client assets.

The move represents a change of ownership with UK investment firm 3i Group selling its stake.

This is not the first time a private equity house has played in this sort of space: Bridgepoint, for example, bought Quilter, the UK investment house, from Morgan Stanley, in early 2012. (Quilter has subsequently joined with Cheviot Asset Management.) Permira has total committed capital of around €22 billion ($29.8 billion).

 Bestinvest was formed in 1986; after a period of change it has restructured to become one of the most prominent wealth advisor businesses in a market coping with the impact of regulatory change, such as the Retail Distribution Review. (To read an interview with the firm, click here.)

The firm argues that its mix of execution-only, advisory and discretionary wealth management offerings puts it in a good position to exploit the changing patterns of people’s financial lives, as they move from entering a jobs market, accumulation of savings, and on to retirement.

One of the alleged consequences of the RDR crackdown on trail commissions and push for higher qualifications on advisors has been to drive up costs, encouraging some firms to raise minimum investment sizes for clients, producing “orphan” customers. Bestinvest argues its business model can cater to people left in that position. Some commentators, such as Brian Spence of Hamilton Spence, a consultant to advisors looking to sell or buy other businesses, has argued the RDR has damaged the industry in some ways. (See here.)

“The success of our business has been firmly built on our impartiality and expertise in research and offering the highest standards of professionalism and client service at great value-for-money. In looking for a partner to support the future growth of the business, the Permira funds stood out from the crowd in their understanding and appreciation of our distinctive ethos and their commitment to invest in the management team’s growth strategy,” Peter Hall, chief executive at Bestinvest, said in a statement today.

“The introduction this year of the Retail Distribution Review, which has replaced commission-based advice in the UK with transparent fees, has presented Bestinvest with an excellent opportunity for both organic growth and potential acquisitions,” he continued.

The firm argues that the UK wealth management industry offers attractive growth dynamics with assets increasing in excess of 10 per cent annually in recent years. It also hinted at potential for more consolidation as the sector remains very fragmented with a long tail of subscale firms with under £3 billion of client assets.

“During 3i’s investment, Bestinvest has been transformed as a business and continued to grow, despite some challenging times in the financial markets. As Bestinvest enters a new phase of development we thought now was the time for us to realise the value created with the management team and introduce a new partner to support the company’s future growth,” Ian Lobley, partner at 3i, said of his firm’s decision to sell.