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Sesame, You’ve (finally) got a Friend

At last the wait is over. Friends Provident this week came to the rescue of Sesame, the IFA network with a burgeoning direct arm and comparatively strong multi-tie proposition that now has a single, dedicated provider parent.

For about three or four years now, technology company Misys has made no secret of the fact that it wanted rid of Sesame, continually being viewed as strategically non-core.

For sometime there has been great worry over the huge potential exposure for historical claims following the merger of the five networks into one that created Sesame in early 2003.

But the business has been on the road to recovery over the last year, improving its turnover as it pushes IFAs towards its non-AR route, Sesame Direct.

Friends Provident paid £75m for Sesame, which some have seen as well below the asking price. Sesame was valued at £200m a couple of years ago, indicating that the business firm’s value might be somewhat questionable today.

When you compare the price tags side by side with Pantheon, the other IFA firm Friends bought this week, there is a stark contrast.

Sesame, well established and with over 7,500 advisers went for £75m. Pantheon is relatively little-known, has just 32 advisers and was picked up for £16.8m, around a quarter of the price.

The price tags paid show the significant differences in value between the two types of businesses, in terms of scale, type of client, reputation and liability, but one or two industry experts have raised quizzical eyebrows about the amounts.

Friends is adamant it wants to expand into distribution and in acquiring one of the largest and most established groups, it might well make a success of it.

Analysts like Ned Cazalet are of the view that in buying into distribution it is a shortcut to get all the assets under advice transferred onto the providers’ wrap platforms. Certainly the assets of over 7,500 advisers would be a good start to FP’s wrap when it finally launches.

Insurers buying into distribution is definitely the theme of this week, with Standard Life making its fourth and more than likely final investment into an intermediary firm by taking a 25 per cent stake in support service provider Threesixty.

Both Sesame and Threesixty are adamant that being partially or wholly owned by a product provider will not impact on the impartiality of their advice, instead seeing the moves as opportunities for better financial stability that will serve to improve their offering to advisers.


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