Caledonia Investments has agreed to sell its majority stake in UK wealth manager Seven Investment Management (7IM) to Canadian pension fund giant Ontario Teachers’ Pension Plan Board (OTPP) for around £255m ($320m, €298m).
This comes two months after our sister publication Portfolio Adviser reported that Caledonia Investments had given potential bidders for 7IM until the end of July to table indicative offers.
The transaction is subject to change in control approval by the Financial Conduct Authority (FCA) and is expected to complete in late 2023 or early 2024.
7IM was acquired by investment trust Caledonia in September 2015 in a deal worth around £100m ($126m, €115m). Last year, Sky News reported Caledonia was looking to offload the wealth manager for £400m, following a declined £300m takeover offer by Brooks Macdonald in February 2022.
Dean Proctor, chief executive of 7IM, said in a London Stock Exchange announcement: “The team and I would like to thank Caledonia for their support and resources over the years in helping 7IM to deliver on its strategy and vision. Caledonia’s enduring capital approach has allowed us to focus on what is right for 7IM, our colleagues and, most importantly, our clients.
“We are now well positioned for our next phase of growth, and I am excited about our new partnership with OTPP, who are deeply supportive of the team and the firm’s strategy.”
Subject to the exact timing of completion, Caledonia is expected to receive cash proceeds of around £255m, net of transaction expenses, for the sale of its ordinary and preference shares in 7IM.
The cash proceeds will be held on deposit for future investment. In its audited accounts as at 31 March 2023, Caledonia’s shareholding in 7IM was valued at £187.1m, excluding a further £13.2m which will be invested into the business prior to completion.
Tom Leader, Caledonia’s head of private capital, added: “In the eight years since our acquisition of 7IM in September 2015, the business has more than doubled assets under management, nearly trebled headcount, and significantly enhanced its revenue and profitability. Caledonia’s investment philosophy is to focus on growth over the long term, ensuring that our portfolio companies are well placed for exit when the right time comes for all stakeholders.
“Our investment in 7IM embodies this philosophy and we are delighted with what Dean and his team have achieved during our partnership. We thank and congratulate them for their stewardship of the business and wish them every success in their new partnership with OTPP.”
A recent survey by PwC found one-in-six (16%) asset and wealth managers globally are expected to be “swallowed up” or “fall by the wayside” by 2027 amid a wave of consolidation in the industry.