Synova to buy majority stake in 3173

Ero Partsakoulaki
28 June 2022

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Synova is to make a majority investment into 3173, a UK-based provider of pensions administration software, trusteeship and governance services.

The company's management and founders will retain a significant minority stake in the GBP 25m revenue business, according to a source familiar with the situation.

The business received inbound interest from other PE firms, according to the source.

Synova, which typically invests in companies valued at GBP 50m-150m, is investing its fourth generation GBP 365m fund, raised in 2019, which focuses on its core sectors of technology, financial services, business services and health and education.

Synova's managing partner, David Menton and investment director, Sunil Jain, will join the board of 3173, subject to regulatory approval, according to a press release.

The investment is set to consolidate the group's Dalriada and Spence's market position in the pension trusteeship and consultancy space organically, particularly scaling the company's Mantle software platform for pension scheme administration.

The company's proprietary software platform, Mantle, is a fully integrated software platform in the market covering administration, actuarial, and investment modelling. It delivers real-time actuarial valuations for pension schemes from live administration data and is deployed both internally and as a pure software-as-a-service (SaaS) solution to third-party customers.

There is potential for growth across the different divisions of the business and there will be some selective acquisition opportunities, particularly the US market, according to the source familiar.

The company is experiencing growth as demand for both pension administration and independent trustee and governance services grows due to the increasing complexity and regulatory requirements that pension schemes face, according to the press release.
The transaction is subject to FCA approval, expected in the coming two to four months.

Synova declined to comment on the transaction. 3173 did not reply to a request for comment by the time of publication.

Company
Privately owned 3173 Group, founded in Belfast in 2000, comprises three brands: Mantle (proprietary software platform), Dalriada (professional trusteeship), and Spence (actuarial and admin). The firm has clients throughout the UK, serviced from offices in London, Belfast, Glasgow, Manchester, Birmingham, Bristol and Leeds.

People
3173 − Brian Spence (co-founder and CEO).
Synova − David Menton (managing partner); Sunil Jain (investment director); Matthew Charman (investment director); Charles Dale (investment director); Mao Isobe (investment director).

Advisers
Equity − EY (commercial, financial, and tax due diligence); Pinsent Masons (legal); Alvarez & Marsal (tax); Endava (IT).
3173 − Beltrae (corporate finance); Grant Thornton (financial and tax due diligence); Cardano (commercial due diligence); A&L Goodbody (legal).