A number of UK advisory businesses have attracted bids and deals from the private equity industry over recent years.

European investment firm Nordic House has agreed to buy UK independent financial advisor group Ascot Lloyd, continuing a trend of private equity houses buying wealth managers and related businesses. 

Nordic Capital is buying the business from funds managed by Oaktree Capital Management, alongside the interests of Ares Management Corporation.The financial terms of the deal, which is subject to regulatory approval, were not disclosed.

Oaktree, which has invested in the business since 2013, acquired Ascot Lloyd in 2017.

Ascot Lloyd, whose chief executive is Nigel Stockton, is approaching £10 billion ($13 billion) in funds under influence. The firm, which provides financial planning, wealth management and corporate benefit solutions to in excess of 20,000 core clients, has more than 500 staff across its 17 UK locations.

“Ascot Lloyd has grown to become one of the UK’s leading independently-owned IFA firms. Since appointed to lead the investment by the end of 2016, the company has tripled AuM and more than quadrupled revenues, with over 80 acquisitions executed to date. In Nordic Capital we are pleased to have found the right partner and investor for the next stage of Ascot Lloyd’s growth,” Federico Alvarez-Demalde, managing director with Oaktree Capital Management, said.

Houlihan Lokey acted as sole financial advisor to Oaktree and Ascot Lloyd. Proskauer Rose acted as legal advisor to Oaktree. Nordic Capital was advised in the process by, among others, Fenchurch Advisory, Kirkland & Ellis and Alvarez & Marsal. 

There have been several private equity purchases of advisory firms in the UK. Last October, for example, Further Global Capital Management bought a majority stake in financial advisor and tax firm Progeny; in March this year, private equity-backed MKC Wealth purchased London-based IFA firm Anthony, Bryant & Company. In January, Verso Wealth Management, the digitally-driven wealth management group, acquired Pavis Financial Management Limited.

Such private equity involvement in the wealth and asset management space has created some concerns. The UK regulator, the Financial Conduct Authority, is reportedly examining the trend, pondering potential risks (Financial News, 15 September 2021).

In Nordic Capital’s case, it invests across a variety of sectors, such as healthcare, technology, industrial and business services, and financial services. The business was founded in 1989 and has invested more than €19 billion ($20.7 billion) since that date. Its most recent entities are Nordic Capital X with €6.1 billion in committed capital and Nordic Capital Evolution with €1.2 billion in committed capital, principally provided by international institutional investors such as pension funds. Nordic Capital Advisors has local offices in Sweden, the UK, the US, Germany, Denmark, Finland, Norway and South Korea.

The involvement of private equity in wealth management is ironic in some senses because high net worth individuals, family offices and others are increasingly keen on private market investing, attracted by superior yields on such relatively illiquid investments. A question that advisors have raised in the past is whether the time horizons of a typical PE fund – such as five years – align well with the long-term interests of the end-clients.