Sipp firm London & Colonial has been acquired by financial services business STM Group for £5.4m.
The STM board says the acquisition will establish the company in the UK Sipp market and lead to £750,000 cost savings annually.
The acquisition is expected to complete in December and £3.3m of the deal is being funded by a new short-term credit facility.
London & Colonial’s UK Sipp business has around 2,000 members with turnover of approximately £1m.
Its Gibraltar-based insurance business has approximately 1,200 policyholders and generates net turnover of approximately £2m. The Gibraltar business also has approximately 300 qualifying recognised overseas pension schemes under management.
The FCA has approved the deal but it remains subject to approval from the Gibraltar Financial Services Commission.
An initial £4.13m will be paid on completion of the deal with up to £1.25m payable in three stages over the following 12 months.
STM chief executive Alan Kentish says: “Not only does the acquisition get STM a foothold into the UK Sipp market, it also brings with it a number of bolt-on consolidations in the QROPs and life assurance business.
“These will bring STM further economies of scale and will potentially free up regulatory capital in the medium term to fuel further growth.”
London & Colonial chairman Robin Ellison adds: “We recognise that STM’s enviable distribution network will allow London & Colonial’s businesses to flourish more quickly than could be achieved by the existing management and network.”
In the year to 30 September, London & Colonial reported audited revenues of £3.83m, a loss before tax of £70,000 and net assets of £4.8m.