Scots fintech Nucleus' takeover by James Hay confirmed after regulatory approval

The £145 million acquisition of Edinburgh fintech Nucleus Financial by James Hay has received regulatory approval – confirming the creation of a £47 billion mega platform.

The combined group will be called Nucleus, a “financial planning and retirement-focused platform with the scale to enable greater investment in products, price and service to meet the needs of advisers and their clients”.

The deal will see “wrap platform” provider Nucleus disappear from the stock market, after an £140m initial public offering on London’s junior market Aim in 2018. The firm is behind software platforms that enable financial advisers to provide online access to clients for investments across ISAs, pensions and bond accounts.

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The transaction “will offer a compelling blend of online technology and offline service that can compete at the winning end of the advised platform market”, said Nucleus, which added that the deal is now subject only to formalities. “This is an exciting time in the platform sector and the combined group is set to thrive as it continues to develop a broader range of digital capability,” it also stated.

Nucleus founder David Ferguson said the firm having 'always tried to do the right thing and put the customer centre stage' has led to this deal. Picture: Lisa Ferguson.

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Interview: David Ferguson, Nucleus Financial Group

The Nucleus and James Hay platforms will continue to operate independently for the foreseeable future while integration proposals are developed, and more details of the combined group’s development plans, including the future leadership structure, will be announced in the coming months.

The bid has already received shareholder acceptances in excess of 94 per cent of Nucleus shareholders.

James Hay is a retirement-focused adviser platform, and its chief executive Richard Rowney will lead the combined group. He said: “This deal creates one of the leading, independent, adviser platform groups in the UK with over £47bn of AUA [assets under administration]. We see this as a coming together of the very best parts of both businesses, building on our retirement expertise and their digital capability to develop a service that truly meets the needs of advisers and their customers.”

Different

David Ferguson, Nucleus founder, added: “Since 2006 we've always tried to do the right thing and put the customer centre stage. Actually meaning that has made us a little bit different from others in the sector but it also carried us to £19bn in AUA and led to this deal.

“We have full respect for the challenges ahead and are energised by the goal of working with our new colleagues to create the UK’s most respected and successful adviser platform.”

The bid from James Hay was revealed in February, and the proposed deal would retain Nucleus’ capital base but lead to a “moderate reduction” in headcount. The news followed December’s revelation that the Scottish firm had received a number of takeover approaches.

Nucleus last month in quarterly results said it had continued to grow its AUA to £18.9bn as of the end of June, up 19.2 per cent year on year and 5.1 per cent on the previous quarter. By comparison, the FTSE All-Share Index increased 17.7 per cent year on year and by 4.8 per cent on the last quarter.

The fintech also acquired assets of OpenWealth at the end of last year.

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