SHAREHOLDERS in Edinburgh-based Nucleus Financial have overwhelmingly accepted a £145 million takeover offer for the firm.
Salisbury-based retirement planning firm James Hay said investors holding 91.73% of the shares in the Scottish financial technology business had accepted its recommended cash offer of 188p a share.
The offer now becomes ‘unconditional to acceptances’ – meaning the company has agreed to sell to the bidder.
“I’m very pleased that shareholders have overwhelmingly accepted our offer,” said Richard Rowney, the chief executive of James Hay. “Shareholder approval is a key milestone in the journey to bring together the respective expertise of Nucleus and James Hay.”
Nucleus Financial was set up in 2006 by chief executive David Ferguson, an actuarial mathematics and statistics graduate from Heriot-Watt University in Edinburgh.
The deal values his stake in the business around £1.7m. Mr Ferguson had previously worked at former Scottish fund manager Ivory & Sime and former life and investment firm Scottish Life International.
Directors of Nucleus, who include chief financial officer Stuart Geard, hold 3.69% of the shares in total, worth around £5.3m under the all-cash deal.
The process behind the acquisition was initiated by South African financial services group Sanlam, an early investor in Nucleus and its biggest shareholder. It retained a controlling 52% stake – worth more than £75m under the James Hay offer – after Nucleus floated on London’s Aim exchange for smaller companies in 2018.
Nucleus Financial allows financial advisers to give their clients access to all their financial investments, such as individual savings accounts and pensions, in one online account.
The firm had assets under administration of £18bn as of 31 March 2021, up 28.4% year-on-year and 3.1% on the previous quarter.
James Hay manages more than £27bn worth of pension and investment savings for 59,000 investors. This means the combined business will manage assets of around £45bn.
“We are excited by the prospect of working with the Nucleus team as we seek to create a leading independent adviser platform with circa £45 billion of assets under administration, and the scale to invest in the technology, products and service for the benefit of advisers and their clients,” Mr Rowney said.
In February, when James Hay’s offer was announced, Mr Ferguson said: “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.”
James Hay, which is backed by London-based private equity firm Epiris, had changed its bid from a ‘scheme of arrangement’ to a takeover to remove uncertainty created by some shareholder dissent to the deal.
James Hay has around 700 employees and Nucleus has 392. Employees at Nucleus had opposed the takeover over concerns that James Hay had said an unspecified number of jobs may be cut in central functions in the enlarged business following the takeover. Employees were also unhappy about the proposed transfer of around 230 Nucleus staff to another fintech, FNZ, which has offices in Edinburgh and is expected to provide platform technology for the enlarged group.
A spokesperson for James Hay said: “Following completion of the Nucleus acquisition, James Hay will perform a review of the combined group’s central and head headquarter functions. 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.”
James Hay was founded in 1979 and specialises in self-invested personal pensions.
Nucleus is one of Scotland’s biggest fintechs. Mr Ferguson is a previous non-executive chair of the industry body FinTech Scotland.
The takeover remains subject to regulatory approval and is currently expected to complete in the second half of the year.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here