Warburg Pincus invests >£250m in S&W merger with Permira's Tilney

The investment is greater than £250m, according to a source close to the deal. The firm began looking at the deal several months ago, according to the source.

The proposed acquisition of S&W was confirmed in August 2019 by the company's largest shareholder, AGF Management, and is expected to be worth £1.8bn. AGF will fully exit following completion of the deal.

The Financial Conduct Authority is said to have refused to approve the deal in the Spring of 2020. It stipulated that unless stakeholders raised more than £200m in new equity for it to significantly reduce its external debt level, it would not approve it, according to a report by Sky News.

The new investment will revise the proposed merger's capital structure, though the £1.8bn price tag will remain the same. The combined company is expected to have debt of 3.5x EBITDA, according to the source.

Warburg Pincus is currently investing from its Financial Sector Fund, which closed on $2.3bn in December 2017 and was 55% deployed as of December 2019. Warburg Pincus may also invest from more than one fund, according to the deal.

The firm will become the second largest investor in the deal after Permira. This is Warburg Pincus's sixth investment in an asset management firm.

In 2014, UK wealth manager Bestinvest, backed by Permira, acquired the regional businesses of Tilney from Deutsche Bank's asset and wealth management division. Permira provided fresh equity to support the acquisition.

Company
Founded in 1881, S&W offers investment management services and has around £22.9bn in funds under management. Headquartered in London, it employs 1,800 people in 12 offices across the UK, Ireland and Jersey.

Advisers
Equity – Rothschild (legal).
Acquirer – Evercore (corporate finance).
Company – KBW (corporate finance).

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• Topics
• Expansion
• UK / Ireland
• Financials
• United Kingdom
• Warburg Pincus
• Permira
• Buy-and-build
• Build-up