STM Group to buy £3.3m SIPP and SSAS business

STM Group, the cross border financial services provider, has entered into an agreement to acquire the portfolio, net assets and trustee companies of the SIPP and SSAS businesses, from Mercer Ltd, for a fixed consideration of £3.34m.

Completion is planned for 31 August 2022, STM said in a statement today (26 July). 

The deal to buy the Premier Pensions' SIPP and SSAS business from Mercer owned JLT Benefit Solutions will be funded from existing financial resources and the remaining available debt facility previously arranged with the Group's bank. 

The acquisition is not subject to regulatory approval as STM is not acquiring the regulated entities themselves, however both parties have kept the FCA informed of progress throughout the transaction process, the cross border financial services provider said. 

The Acquisition of the portfolio is complementary to STM's existing product offerings in the UK SIPP and SSAS market and will add some 2,100 SIPPs and 700 SSASs to the UK portfolio, which will double the revenue generated from that UK personal pensions business and provide a solid platform for scalability, particularly for our SSAS operations, and efficiencies going forward. 

STM will retain the office premises in Cardiff, as well as the existing staff members, who are well regarded and experienced, giving a further depth of resources and knowledge to STM's UK business.

The portfolio generated some £0.87m EBIT for the last financial year ended December 2021 and is expected to continue contributing £0.87 million EBIT to STM's current UK business, Options, on an annualised basis, after a twelve month phased integration process.

As a result of transaction costs of £0.3m, and specific integration costs of £0.3m, it is anticipated for the four months to 31 December 2022 that the acquisition will be a negative contribution of £0.3m to the Group's result.

STM further said it will work with Mercer's team to ensure a seamless transition for clients, staff colleagues, and other stakeholders, and have entered a transition agreement with Mercer for a period of up to six months as commitment to such a process.

The deal will also give Options access to an expanded network of intermediaries who have introduced clients to Mercer. Working with the established team in Cardiff, Options will build further on the existing strong relationships, STM said. 

The acquisition consideration includes the purchase of the net assets of the business which amount to circa £ 1.0m, which primarily relates to fees yet to be collected from clients. In addition, Options, will make a one-off adjustment to account for deferred revenue under its accounting policy.

 Alan Kentish, chief executive officer of STM, said: "We are delighted that Mercer has chosen STM as the new home for its SIPP and SSAS business, previously acquired as part of its own acquisition of JLT. Both ourselves and Mercer are committed to ensuring a seamless transition for clients, intermediaries, staff and other stakeholders.

"The revenue generated by this portfolio will mean that our Options personal pension solution business in the UK will effectively double in size and will give us a new centre of excellence for our SSAS business.

"The business is well run by the team in Cardiff.  This allows us to implement an integration plan that can dovetail with our overall plans in relation to changing our operating model to improve our margins, post significant investment in our IT infrastructure.  I am delighted to welcome the team to the STM family.

He added: "The SIPP marketplace continues to see change and out of this comes opportunity to differentiate our proposition. Unlike most SIPP providers, STM also has a UK workplace pension solution and this in itself allows us to offer a full suite of retirement savings options to anyone, no matter where they are within their career path.

"I look forward to updating the market as to our progress on this exciting next stage of the STM journey."