Synova scores 4.5x on sale of Fairstone to TA

Greg Gille
25 February 2021

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Synova has sold Fairstone Group, an independent financial adviser (IFA) consolidation platform, to TA Associates, netting a 4.5x return.

The investment generated a 40% IRR for the GP, according to a statement. All other financial details remain undisclosed, with Synova declining to comment further when contacted by Unquote.

Fairstone was the first deal made through Synova's third fund, which closed on £250m in early 2016, and will be the vehicle's first exit. Synova will reinvest for a minority stake via its fourth vehicle, which closed in 2019.

The GP committed £25m to Fairstone in 2016, according to Unquote Data. Since then, the company has made 33 bolt-ons, with staff numbers and revenues increasing threefold, the GP said in a statement. According to previous Unquote coverage, Fairstone was generating revenues of £32m at the time of the acquisition in 2016.

EBITDA has increased sevenfold over the holding period. According to a source close to the situation, current EBITDA is believed to be in the region of £20-30m.

The company secured a debt facility with Alcentra at the beginning of 2020, prior to which acquisitions were funded by the sponsor, the source added. Alcentra increased the scale of the acquisition facilities available to the company as part of this latest deal, according to a statement by Fairstone.

TA Associates closed its flagship fund TA XIII on its hard-cap of $8.5bn in May 2019. The vehicle focuses on the mid-market globally, making equity investments in the range of $75-400m across the technology, healthcare, financial services, consumer and business services sectors.

Besides Fairstone, recent TA investments in the financial services space include insurance brokerage businesses Netrisk and Odealim.

Company
Established in 2008, Newcastle-based Fairstone is an IFA consolidation platform. It currently encompasses 380 IFAs across the UK, providing financial advice to 34,000 private clients. With fee income in excess of £70m, the group operates across 42 locations with a head office in Newcastle, and comprises financial management, private wealth, corporate solutions, mortgage solutions and estate planning channels.

People
Synova – Alex Bowden (partner); Matthew Charman (investment director).
Fairstone Group – Lee Hartley (CEO).

Advisers
Equity – Evercore (M&A); Travers Smith (legal); PwC (financial due diligence, tax).
Company – Keefe Bruyette & Woods (M&A); Proskauer Rose (legal).