Private equity firm HPS Investment Partners has become a majority investor in the combined platform group made up of Nucleus and James Hay, while existing private equity owner Epris will become a "significant" minority shareholder.
The new investment, announced by Nucleus on Tuesday (29 March), will reportedly see no changes to its business model or management team. It will continue to use scale to invest in product, service and price, it said. The deal remains subject to regulatory approval and its price tag was undisclosed.
PE firm Epris will continue to own a minority stake in the business. Epiris bought James Hay's parent company for £206m in 2018 and then snapped up Nucleus for about £140m in early 2021, creating a combined adviser platform business with £45bn assets under administration. Since the creation of the enlarged group in 2021 over £5m has already been invested in service and £6m committed to platform development for 2022, according to Nucleus.
Epiris has since sold the financial planning business Saunderson House, which it bought from James Hay's parent company IFG in the same deal, for £150m to Rathbones. The deal was part of a trend that has seen a number of advice firms and adviser platforms bought by private equity houses, such as True Potential, Parmenion, Novia, AFH and many more.
Nucleus is currently powered by Bravura technology, while James Hay has entered into a long-term deal with FNZ. The firms said there would be no technology change for advisers who use either platform in the short-term but integration over the medium to longer term would have made sense.
The lang cat founder and principal Mark Polson said: "On one level today's news is not that big a deal - the combined Nucleus Financial Platforms Group now has another significant shareholder. Operationally, so far as I can see, the strategy of rehabilitating James Hay with a move to a new platform, with Nucleus continuing to run in a steady-state, for now, is unchanged."
He added: "But behind the scenes, I think there are two interesting things here: firstly, the combined group is a big business now - perhaps the fifth-biggest intermediated platform business in the UK - and so having more firepower on the shareholder register is probably a good thing. Secondly, the group is clearly going for scale, and that likely means it will want to take advantage of any potential further acquisitions out there in the years to come. Again, having another, larger shareholder might help with that.
"But on a day-to-day basis, as ever with this kind of thing, platforms keep doing what they do - holding investments, paying income and helping planners deliver their proposition."
Sources familiar with the situation, when rumours of the sale first came about in January, told Professional Adviser: "Any potential changes are at the shareholder level; it remains very much business as usual for both platforms." They added there would be "no impact on development plans, staff, advisers or their end customers."
Nucleus CEO Richard Rowney said: "While today's news will not result in any immediate practical change, it is certainly a vote of confidence, not just in our strategy, but also in our people - the 650 dedicated colleagues who make up our business, with a sole focus of supporting advisers, and helping them make retirement more rewarding for their clients.
"We'll now continue our important work of ensuring the basics of platform provision are right; serving advisers properly, executing orders on behalf of their clients and ensuring the financial plans they've designed can be effectively delivered. At the same time we'll continue to share the benefits that come from economies of scale with our customers, investing in giving them better products, better service and better prices."
