Rival in £40m deal to buy savings arm off Alliance Trust

Lord Smith of Kelvin, Alliance Trust's chairman, deemed the two businesses 'highly complementary'. Picture: Lisa Ferguson.
Lord Smith of Kelvin, Alliance Trust's chairman, deemed the two businesses 'highly complementary'. Picture: Lisa Ferguson.
0
Have your say

New owners Interactive Investor plan growth of platform operation in Scotland.

Alliance Trust, the Dundee-based investment group, has struck a £40 million deal to sell its savings platform arm to rival Interactive Investor.

The move, which ends months of speculation over the future of the business, will see around 300 Alliance Trust Savings (ATS) staff move over to the UK’s second-largest investment platform, which has said the operational base of ATS will remain in Scotland.

The new owners plan further investment in the pensions and savings operation, which has 110,000 customers and £16.2 billion of assets under administration (AUA), but said it was too early to be specific given the deal still needs regulatory approval.

The sale is the latest move in Alliance Trust’s strategy to focus on its core global equity portfolio. It has already sold its in-house investment management arm, Alliance Trust Investments, to Liontrust, as well as a recent agreement to dispose of most of its private equity assets.

ATS had been valued at more than £60m last year, but in March, Alliance Trust reduced that by £23.5m after what it described as a “challenging” year for the business, which was founded in 1986.

Lord Smith of Kelvin, Alliance Trust’s chairman, said a key consideration for the board in negotiating the sale deal was a commitment to maintaining ATS’ presence in Scotland. He said the two businesses were “highly complementary”, adding: “ATS customers, many of whom are Alliance Trust shareholders, will benefit from Interactive Investor’s similar low flat-fee structure, as well as its increased scale and focus.”

The deal will create a platform with £35bn of AUA and 400,000 customers.

Richard Wilson, chief executive of Interactive Investor, said: “This is another important step in our ambition to build the UK’s best investment platform. The acquisition brings together the country’s two largest fixed-price providers, adding significant scale to Interactive Investor, and reinforcing our ability to deliver excellent choice, value and service to all our customers.”

The £40m price includes Alliance Trust’s office building in Dundee. As at 30 June, ATS, which represents 1.3 per cent of the trust’s portfolio, had a fair value of £38m and the Dundee building was valued at £4.9m. The proceeds from the sale will be invested in the global equity portfolio, managed by Willis Towers Watson, which following completion will represent close to 100 per cent of its investment portfolio.

Canaccord Genuity said: “This transaction further streamlines the investment proposition and accordingly is a welcome development.”

Earlier this year Interactive Investor closed its Glasgow operation with the loss of around 60 jobs following a review of the firm’s offices across the UK after its acquisition and integration of rival TD Direct Investing. The company is majority owned by JC Flowers and has AUA of £20bn and more than 300,000 customer accounts