Edinburgh fintech Nucleus to stay in capital but some jobs to go after £145m takeover

Nucleus Financial Group, the Edinburgh-based fintech, is set to disappear from the stock market after being acquired in a deal that will retain the firm’s capital base but lead to a “moderate reduction” in headcount.

Nucleus, which chief executive David Ferguson set up with the backing of a number of financial advice firms in 2006, has developed software platforms that enable financial advisers to provide online access to clients for investments across ISAs, pensions and bond accounts. Picture: Lisa Ferguson

The takeover by James Hay Holdings values Nucleus at some £144.6 million and creates a financial adviser platform with around £45 billion of assets under administration (AUA).

The move follows December’s revelation that the Scottish firm had received a number of takeover approaches.

Nucleus, which chief executive David Ferguson set up with the backing of a number of financial advice firms in 2006, has developed software platforms that enable financial advisers to provide online access to clients for investments across ISAs, pensions and bond accounts.

The “wrap platform” provider, which floated in 2018, is seen as one of the biggest successes of Scotland’s burgeoning fintech – financial technology – sector.

While there will be no immediate change for advisers on either platform, separately James Hay has entered into a long-term partnership with fellow fintech FNZ for the provision of specialist platform technology and outsourced administration.

The acquisition of Nucleus is subject to shareholder and regulator approval but is expected to complete in the second quarter of 2021.

Ferguson said: “Since we launched in 2006 we’ve always put the customer centre stage and while that has made us a little bit different, it’s carried us to £17.4bn in AUA and to a point where the sentiment of our users and our people has never been better.

“Becoming part of this enlarged group gives us a key role in a much bigger story where we can create a leading independent platform of scale with a high tech, high touch proposition and philosophy.

“I look forward to getting to know our new colleagues and moulding a group culture that is centred on doing the right thing and building a market-defining product that really delivers for advisers and their clients.”

In its cash offer proposal, James Hay said: “Given the proposed target operating model of the combined group, it is envisaged that a material number of Nucleus’ employees, principally within the technology and platform operations functions, will transfer to FNZ at a time that is aligned to the migration programme, over the medium term.

“The review and integration process is expected to take up to 12 months and may identify opportunities to leverage skills and talents across the combined group but may also lead to a moderate reduction in headcount where there is duplication or where operational efficiencies might be achieved.”

It added: “James Hay Holdings does not envisage any change in the locations of Nucleus’ offices and anticipates that any employees that transfer to FNZ will continue to work from their current locations.”

FNZ was founded in New Zealand in 2004 and expanded into Scotland just a year later. It has been building up its Edinburgh presence and now employs several hundred people in the city as well as at a Dundee operations centre.

Nucleus shares are currently traded on London’s Alternative Investment Market (Aim).

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