Tavistock shares surge on new partnership with Titan Wealth
Tavistock Investments has entered a 10-year strategic partnership with Titan Wealth it announced on Monday, with Titan also agreeing to acquire Tavistock's multi-asset manager Tavistock Wealth (TWL), which has more than £1bn of funds under management, for consideration of up to £40m in cash and a 10-year earn out.
The AIM-traded firm said Titan was established by a “highly-experienced” management team with “strong” financial backing.
Its objective was to become a large-scale provider of execution, settlement, custody and administration services to the asset and wealth management sector.
In addition to acquiring TWL, Titan was also seeking to acquire Global Prime Partners (GPP), which provides platform services to institutional clients and fund managers, with £2bn in assets under administration.
The company said the primary terms of the partnership, including the sale of TWL, were that Tavistock would act as Titan's retail distribution partner, with the partnership set to accelerate the growth of Tavistock’s wealth management business, both organically and through an acquisition programme.
Tavistock currently has about £4bn of funds under advice.
Titan would acquire TWL for a consideration of up to £40m, or 6.58p per Tavistock share based on the current number of shares in issue, to be paid in cash, as well as a 10-year earn-out.
It said £20m would be paid on completion, with a further £20m paid in equal annual instalments over the following three years, linked to the maintenance of TWL's revenues.
Under the strategic partnership, Tavistock said it would also receive additional payments over a 10-year period, equivalent in value to 50% of future net income on any increased funds under management within TWL's ‘Acumen UCITS’ funds.
A new company within the Tavistock Investments Group, Tavistock Asset Management, would continue to market the group's centralised investment proposition, which would include both the Acumen UCITS funds and the company's model portfolio service.
Tavistock Asset Management would retain Titan as investment manager for the model portfolio service.
While becoming part of Titan, Tavistock said its chief investment officer John Leiper and his team would continue to work “closely” with the company and its advisers.
In its audited accounts for the year ended 31 March 2020, TWL reported a pre-tax profit of £2.3m from gross revenues of £5.6m, and gross assets of £5.2m.
The transaction would “greatly enhance” Tavistock's cash resources, the board said, and would enable it to minimise shareholder dilution as it embarked on an accelerated acquisition programme.
Tavistock’s directors expected that the contribution to the firm’s profitability from the programme would “significantly outweigh” the loss of TWL's contribution to the company in the short-to-medium term.
“This is a great opportunity for both companies,” said chief executive officer Brian Raven.
“Whilst Tavistock Wealth is becoming part of Titan, we will still be working closely with our highly successful investment team.
“The partnership with Titan endorses our corporate strategy and will enable us to accelerate the growth of our business and deliver maximum value to our shareholders.”
At 1513 BST, shares in Tavistock Investments were up 58.79% at 4.21p.