One of Hargreaves Lansdown’s biggest shareholders is looking to invest £100m in a range of specialist financial services firms.
Adam Norris, who set up Hargreaves’ pensions and annuities arm Pensions Direct after joining the company in 1999, is returning to financial services after investing in 18 businesses outside the sector.
Norris is looking to take a stake of between 25 and 30 per cent in the advice firms and specialist providers he invests in, with the investment coming from his venture capital firm Horatio Investments.
Individual investments will range from around £250,000 to £20m, though will be typically be between £1m and £5m. Norris anticipates allocating between £10m and £20m before the end of the year.
Norris says he has no intention competing with Hargreaves Lansdown. Instead, he plans to invest in a series of niche start-up firms including the protection, at-retirement, and alternative investment markets.
He says: “I will not be buying traditional IFA businesses. There is an opportunity with more complex investments like venture capital trusts and enterprise investment schemes as while they add to people’s portfolios, most advisers walk away from these kind of products. I think there is a hole in the market there.”
Norris’ foray outside of financial services has included investment in a juice company and a software firm which now works with Virgin.
But he feels the time is right to invest in retail financial services again and says he plans to use his industry contacts to find the kind of business propositions he is looking for.
Norris says: “The thing I have realised with all those businesses is I do not know any of them as well as I know this sector. I will be calling up friends and contacts to see who they would be investing in.”
Despite the fall in adviser numbers in the run-up to the RDR and the withdrawal of many banks and insurers from mass market advice, Norris believes those who innovate can still succeed.
He says: “RDR cannot kill a whole industry. There have to be some winners and so we will be looking at those people who are willing to innovate, change and adapt.”
Norris has recruited a number of former industry contacts and colleagues to Horatio Investments, including former Jelf Private Clients managing director Martin Bowles, who previously led the corporate pensions and IFA advisory team at Hargreaves.
Nic Nicolaou, who helped developed the Hargreaves corporate pensions team, has also joined Horatio as investment manager.
Norris anticipates he will hold stakes in his chosen investment firms for between three and 10 years before selling to other investors or moving to public listings.
He says he has no intention of taking a controlling share in any business or of merging independent firms into a larger network or franchise. He also does not plan to be on the board of the companies he invests, or be involved in the day-to-day running of the businesses.
Instead he expects to offer guidance where needed.
He says: “Looking back I am very grateful for the help I got from Peter Hargreaves and Stephen Lansdown. I sat in the same room as them to start with and it was great to being able to turn to them to ask them any questions. Similarly, I understand today’s financial service sector and feel I can help. I believe most successful investments have a backer behind them that helps the business to grow.”