Private equity Synova Capital has taken a £25m investment in IFA consolidator Fairstone Group.
The deal means that Synova becomes the lead investor in Fairstone and could make further cash available in the future.
The injection also means a realisation by several early stage shareholders in Fairstone all of whom, said the IFA in a statement, have received substantial returns on their primary investments. Four major existing shareholders – Committed Capital, Northstar Ventures and two family offices – have retained equity positions in Fairstone.
Chief Executive of Fairstone Lee Hartley (pictured above right) said: “Synova’s investment signifies an exciting gear change in Fairstone’s build plan and demonstrates our appetite to complete more and larger buy-out deals over the short to medium term. We are committed to working with high quality firms, with meaningful levels of assets under management, who want to drive their performance upwards and realise optimum value for their business.
“Our entire management team is obviously delighted to be working with Synova and this project has taken several months of careful planning. Synova has a proven track-record in investing into highly scaleable and technology leveraged businesses like Fairstone. This partnership with a leading mid-market PE house will allow us to accelerate our successful Downstream Buy Out (DBO) acquisition model beyond our current forecasts.”
Partner at Synova and newly appointed Director of Fairstone Alex Bowden (pictured above left) said: “Widespread change across the financial services sector has paved the way for new and innovative business models like Fairstone to develop. Against the backdrop of ongoing professionalization and technological advances, exciting opportunities exist for quality operators to evolve into real market leaders.
“Fairstone already has a strong standing within the sector and now has one of the largest Chartered financial planning firms in the UK within the group. We are delighted to be partnering with Fairstone as the business builds upon its highly successful acquisition programme.”
Fairstone encompasses 260 financial advisers throughout the UK, servicing 25,000 private clients with £5.8bn of assets. It has current run-rate revenues in excess of £32m and plans to complete a sizeable number of acquisitions over the next five years. The group was founded in Newcastle in 2008.
Synova’s funds represent in excess of £400million. This is the first transaction to be completed out of their third fund.