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Private equity firm swoops on James Hay parent

IFG Group, the parent company of Sipp provider James Hay and advice business Saunderson House, has received an acquisition approach by private equity firm Epiris

Private equity firm swoops on James Hay parent

IFG Group, the parent company of Sipp provider James Hay and advice business Saunderson House, has received an acquisition approach by private equity firm Epiris.

The acquisition values IFG’s share capital at approximately £206 million, and IFG shareholders will be entitled to receive £1.93 in cash per share. IFG said this represented a premium to shareholders of over 40%.

IFG chief executive Kathryn Purves said: ‘The offer by Epiris represents a compelling opportunity for shareholders to realise an immediate and attractive cash value for their shareholding in IFG today.

‘In addition, our employees and clients will benefit under the ownership of Epiris, which should help accelerate the delivery of IFG's strategic objectives and the underlying strategies of James Hay and Saunderson House.’

Financial performance

The acquisition is conditional on the approval by IFG Shareholders and the sanction of the scheme by the High Court; as well as regulatory approvals.

The announcement came as IFG reported its financial performance for 2018.

As at 31 December 2018, IFG had £30.2 billion of assets under administration or advice, across Sipp provider James Hay (£25.3 billion) and financial advice business Saunderson House (£4.9 billion).  

IFG reported an adjusted operating profit of £12.4 million and, on a statutory basis, a post-tax loss of £1 million. 

At James Hay, assets under administration were 1% lower than 2017 at £25.3 billion (2017: £25.5 billion) with the Sipp provider blaming adverse market movements for offsetting net inflows.

James Hay added 4,651 new clients during 2018, but this was also down 24% on 2017. The Sipp provider said this was driven largely by the slowdown in the defined benefit transfer market since its peak in 2017.

James Hay now serves 58,753 clients of which 55,200 are in Sipps and 3,553 in SSAS and wrap products.

Tax scheme

In April 2017 James Hay announced it was in an a HM Revenue & Customs (HMRC) tax battle over the biofuel investment scheme Elysian Fuels. The Elysian Fuels company, which was reportedly invested in by football stars including Newcastle United manager Rafa Benitez and former Chelsea goalkeeper Carlo Cudicini, is at the centre of a row about tax relief claimed by some investors when they sold their shareholdings back to their Sipps. The maximum tax bill could come to £20 million, James Hay revealed last year.

In an update on the case, James Hay said it had submitted an application under the Finance Act 2004 ‘for the discharge of the HMRC assessment in respect of Elysian Fuels for tax years ended 5 April 2012 and 5 April 2013 and expect to submit applications in relation to later tax years in due course. We currently expect a process involving appeals to tribunal would be unlikely to complete before the end of 2019.’

IFG also reports separate numbers for its financial advice business Saunderson House. Last year IFG reversed its decision to sell Saunderson House. IFG said this created ‘a degree of disruption for both clients and employees’. Saunderson House achieved 239 ‘new client wins’ in 2018, slightly down compared to 247 in 2017 ‘but a strong result, particularly in light of distraction from the cancelled sale process,’ IFG said. However it said its discretionary fund management service accounts for 60% of client wins.

The business also saw assets fall, down 4% on 2017 to £4.9 billion, again blamed on ‘adverse market movements’.

Saunderson House total client numbers increased 10% (from 2,121 in 2017) with client retention improving to 99% (2017: 96%).

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