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Who will battle it out to buy platform tech firm FNZ?

The advised platform market has seen significant change in company ownership in recent years, either through acquisitions or businesses opting to float on the stock exchange.

Now the spotlight is on adviser platform technology firms, with speculation currently focused on Edinburgh-headquartered FNZ.

A Sky News report last month said FNZ’s two private equity backers General Atlantic and HIG Europe are eyeing a sale of the tech firm and looking to start that process before the end of this year.

FNZ, which powers the Zurich, Standard Life Wrap, Elevate and Aviva advised platforms among others, has not commented on the rumours.

The business, which was founded in New Zealand in 2004, is expected to be valued between £1bn and £2bn.

The two current private equity owners own one third of the company each, with the remaining third owned by the FNZ executive team, led by chief executive Adrian Durham.

Timeline: From Kiwi start-up to global ambitions

2004: FNZ is founded in New Zealand by current chief executive Adrian Durham and co-founders. The business was initially backed by investment bank First NZ Capital.

2005: FNZ enters the UK market through a wealth management outsourcing contract with Standard Life

2006: FNZ gets regulatory approval to run an outsourced wealth management platform service in the UK. Its first client is Standard Life with its Wrap platform

2009: HIG Capital buys out First Capital NZ shareholders. FNZ launches its first direct-to-consumer platform with JP Morgan Asset Management in the UK

2010: FNZ expands into Australian market and sets up a service centre in Brno, Czech Republic

2011: Launches first workplace defined contribution retirement platform for Friends Life

2012: General Atlantic invests in FNZ

2013: FNZ expands into Asia through a DC retirement service in partnership with Mercer Retirement Solutions

2016: FNZ opens service centre in Shanghai

2017: FNZ announces investment in robo-adviser Advicefront

2018: FNZ buys German platform Ebase from Comdirect Bank

Source: FNZ

Commentators have ruled out a platform or fund provider being the purchaser because FNZ underpins so many businesses in the market it would be too challenging to handle conflicts with competitors.

Altus Consulting senior consultant Ben Hammond predicts FNZ will either stay in the hands of private equity ownership or be snapped up by a professional services firm, such as a consultancy.

Hammond says: “FNZ is picking up new clients. That has its pros and cons. For a private equity firm, there is value to be seen, especially when it comes to recurring revenue.”

FNZ is also working on the Old Mutual Wealth replatforming and sits behind the new Embark platform. It also backs Vanguard’s direct-to-consumer offering and provides software to Barclays and HSBC.

FNZ itself has also been acquisitive, buying German platform Ebase from Comdirect Bank in July, and it is an investor in robo-advice startup Advicefront.

It is also understood FNZ was linked with the sale of adviser back-office provider Intelliflo, which was ultimately bought by Invesco in June.

Finance & Technology Research Centre director Ian McKenna agrees a potential option for FNZ might be a trade sale to a buyer that wanted a “strong strategic relationship” with the business.

For a private equity firm, there is value to be seen, especially when it comes to recurring revenue

Another source tells Money Marketing further private equity injection could take FNZ from being a “strong business in a few jurisdictions to being a global player”.

It has a presence in Asia-Pacific and Europe but has not entered the US and some commentators question if it could compete with companies in that market that already have a strong foothold and dwarf FNZ when it comes to their valuation and assets under administration.

McKenna says: “FNZ has built a great business concentrated in certain parts of the world. The recent [German] acquisition shows the opportunity that exists in other countries. To maximise on global opportunities it will need substantial backing.”

However, he says advisers and platforms should not be too concerned that FNZ will be distracted by the potential sale and divert its attention away from replatforming projects and other developments.

McKenna says: “These things take up management bandwidth, they take up time and energy.”

He adds because FNZ has had private equity investment in the past, should it go through that process again it will be familiar with the pressure executives face in the first 100 days following a cash injection in the company.

The other main platform tech players operating in the UK adviser market are either listed or privately owned. Bravura relisted on the Australian Stock Exchange in 2016, having delisted in 2013, and GBST is also listed in Australia.

DST acquired State Street’s remaining stake in IFDS, which backs St James’s Place’s Bluedoor adminstration platform, last year. In April this year, DST was bought by investment software firm SS&C Technologies and DST was delisted.

FNZ’s 2016 results, the most recent to be published on Companies House, show the business’s assets under administration stood at £74.4bn for that year, which was a 47 per cent increase from 2015.



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