Private client service provider Sovereign Group has acquired the Gibraltar-based trust and company management arm of STM Group for a consideration of £2.45m ($3.36m, €2.84m) plus net assets upon completion of approximately £570,000.
Under the terms of the deal, 18 of STM Fidecs Management Limited’s (FML) existing staff will be relocating to the offices of Sovereign Trust (Gibraltar) and the company will be rebranded as Sovereign Fiduciary Services.
The rebranded entity will trade alongside Sovereign’s own trust and company management division, headed by Sovereign Trust (Gibraltar) managing director John Blake.
As part of the deal, the Sovereign Group has also acquired the Gibraltar-based tax advisory company STM Fiscalis, which is to change its name to Sovereign Fiscalis. An additional staff member will also join the firm under the terms of the acquisition.
Sovereign currently employs a further 87 staff in Gibraltar across its retirement planning, wealth management and insurance broking arms.
Finances
The sale has four staged consideration payments totalling £2.45m, with the sum payable upon completion being £1.25m, with £500,000 six months after completion, and a further £375,000 12 months after completion.
The final payment, which will be made based upon 2021 audited revenue, will be £325,000 and will be subject an adjustment of 1.5 multiple for any revenue deficit below £1.57m or surplus above £1.6m.
The payment for net assets of approximately £570,000 will be made partly upon completion, with the remainder being paid over as and when debtors and work-in-progress are collected by the sale companies.
Strategy
STM Group said that the sale “complements the company’s strategy to focus on its core activities of pension administration and life assurance” and the “proceeds will be used to fund organic growth opportunities and further support the group’s M&A strategy”.
Alan Kentish, chief executive of STM, said: “We are delighted that the businesses and our colleagues that work within them, as well as our clients, have gone to a good home at Sovereign, and I am sure that there will be a smooth and seamless transition.
“Exiting the Gibraltar trust and company business has been a key deliverable on the group’s roadmap and will allow STM’s executive management to focus on STM’s core activities of pension administration and provision of life assurance wrappers.
“The release of additional cash will be utilised towards further investment in the business where necessary, as well as contributing cash resources towards our inorganic growth strategy aspirations.”
International footprint
Gerry Kelly, Sovereign Group chief executive, added: “This acquisition of FML comes hard on the heels of our acquisition of First Rock Trustees in Gibraltar in October 2020.
“We expect to see further consolidation in the trust and company sector over the coming few years and Sovereign will be actively looking for other opportunities in Gibraltar and elsewhere that match our investment criteria.
“This acquisition further strengthens our position as one of the leading privately-owned private client and corporate services providers worldwide, with approaching 500 employees across a network of 23 offices. It is our intention to continue to grow our international footprint.”
