Duke Street Acquires UKWM

Duke Street Acquires UKWM

DUKE STREET BUYS UKWM TO LEAD SECTOR CONSOLIDATION AND GROWTH

4 March 2011

Duke Street has acquired a majority interest in UK Wealth Management (UKWM), the parent group for several well established wealth management and employee benefits firms, as a platform to lead consolidation in the fragmented sector.

UKWM is a company with £1.4bn of private capital under influence in addition to the corporate pension funds on which it advises. It provides specialist investment and tax planning advice to high net worth individuals and employee benefits advice to organisations and trustees. The company is well positioned to capitalise on significant changes in demographics, government reforms and the financial advice market.

Demand for high quality financial planning advice is increasing, owing in part to a growing number of retirees in the UK with funds to invest. This growth is driven, in the short term, by the post-War “baby boomer” generation; it is also underpinned in the longer term by a generally ageing UK population and increasingly complex pension rules.

With the acknowledged shortfall in private pension funds and the future changes to the state pension, retirees are seeking advisers experienced in maximising retirement income across all asset classes. This is exacerbated by poor returns on deposit accounts, resulting in this generation of retirees being squeezed between the need for security and the need for income – UKWM is well positioned to meet this advice need.

The sector is undergoing a once-in-a-generation structural change, with regulatory pressure altering the way financial products and advice are distributed to UK retail investors. New regulation under the Retail Distribution Review requires improved adviser qualifications, increased capital adequacy and the need to agree transparent fees with clients. We expect regulation to lead to contraction and consolidation in the sector, presenting opportunities for UKWM to grow organically and by acquisition.

UKWM offer an unusually diverse range of services in this sector and its growth plans will extend its footprint in terms of propositions, distribution and geography. The group expects a substantial increase in its employee benefits business, partly resulting from NEST and the government’s plans for auto-enrolment into pension schemes, and this will shortly be enhanced by the addition of an actuarial team.

Reflective of the wide range of services offered by the group, investment strategies are managed by UK Portfolio Management (UKPM) the discretionary investment specialists, and new client investment solutions have recently been launched.

The management team is well respected in the industry, led by Chief Executive Lynn Coleman, who has 27 years’ experience of the insurance and savings industry, the majority of which have been spent in senior roles in major financial services brands, including a number of directorships. Prior to joining UKWM in January 2010, Ms Coleman led the 120-strong independent financial advisor arm of the Co-operative Group.

The acquisition of UKWM was originated and executed for Duke Street by partner Miles Cresswell-Turner and investment director Kate Mullord.

Commenting on the transaction, Miles Cresswell-Turner said:

“UKWM presents an exciting opportunity to gain early scale as Duke Street builds a platform for consolidation in the rapidly changing financial services market.”

Lynn Coleman added:

“Duke Street’s unique understanding of our market, combined with its impressive buy-and-build record, makes the firm a perfect partner for UKWM as it plans for its next phase of growth.”