Palamon scores 13x on £600m Towry sale

Reports surfaced in January this year that Evercore was advising on the process, which attracted interest from Bain Capital, CVC, Hellman & Friedman and Onex.

Palamon partner Daan Knottenbelt told unquote" that Towry attracted strong interest from private equity as it is the only independently scaled platform operating in this market. With further opportunities for consolidation in the wealth management space, private equity firms and private equity-backed Tilney BestInvest all had a strong interest in the company.

Following the deal, the combined group will employ 240 financial planners and 120 investment managers operating from 30 offices throughout the UK. It will manage £20bn of assets and generate combined revenues of £200m.

Previous investment
Palamon first invested in John Scott & Partners in 2003. According to Knottenbelt, the GP's investment thesis was driven by consolidation opportunities in the wealth management market. In the following 12 years, Palamon supported 16 bolt-on acquisitions, the first three of which were financed with equity while the remaining 13 were financed with debt, which led to the outsized return on exit.

Knottenbelt said that a major focus for the buy-and-build strategy was to truly integrate each add-on to the platform, as well as to change the prevailing IFA commission model to a fee-based one. According to the partner, the move to a fee-based model ensured that the company was independent and avoided any potential client conflict.

In 2013 the UK Financial Conduct Authority brought in the Retail Distribution Review, which saw the entire industry move to the fee-based model, which had already been adopted by Towry. According to Knottenbelt, Palamon could see the regulator was trying to address the former commission-based model, and the GP was therefore one step ahead of the market with Towry.

Following the rule change, Towry completed its final six acquisitions, including the purchase of Ashcourt Rowan in 2015.

Over Palamon's investment period, Towry has seen its assets under management grow from £250m to £9bn, while revenues have increased from £5m to £120m.

Permira purchased BestInvest from 3i in November 2013 and bolted on Tilney in February 2014.

Company
Towry is a wealth manager overseeing £9bn of client assets, 85% of which are managed under discretionary investment mandates. The company employs 900 people across 21 offices.

Towry provides financial planning, wealth advice and investment management services to private individuals, families and trustees. It advises on personal finance including pensions, retirement, inheritance tax planning and investments.

People
Palamon Capital Partners – Daan Knottenbelt (partner).
Towry – Rob Devey (CEO).
Tilney BestInvest – Peter Hall (CEO).
Permira – Philip Muelder (partner, co-head of financial services team).

Advisers
Vendor – Evercore (M&A); Slaughter & May (legal); Ogier (legal).

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