Other agenda items
So much is in flux just now in the platform sector. We have a rash of platforms heading for corporate activity of one kind or another. After Aegon’s taking of Cofunds – and we’ll soon start seeing the proper migration of adviser assets, which will be a fascinating moment – we’ve seen more interesting moves in the past few weeks than in the past five years.
Transact’s initial public offering (IPO) has gone well, and the valuation achieved by Peel Hunt of £650m for the business ended up being bang on – many thought that valuation was way too aggressive. Yon lads with the nice wristwatches and chalk-stripe suits may know something after all.
The Transact IPO needed to happen: there are founders in there who are old enough to tour with the Rolling Stones and they have been the very definition of patient capital. It’s a great success story, and given that the amount admitted to the market isn’t too high, the hope is that it can avoid some of the short-termist pressures that can bedevil listed long-term savings and investment businesses.
And where there is one, there is more. AJ Bell is going to have a shot, and Nucleus looks like it’s thinking about it too. With valuations of £350m and £100m respectively, that’s more than £1bn of platformy goodness hitting the capital markets in 2018-19.
It’s important to say that all three of these businesses have strong franchises, are profitable and well-run. Not everyone loves them, and they don’t get everything right, but we hear more good than bad about all three. The banana skin here is about franchise. This affects Nucleus more than the others, I think, though Transact may also be affected. If the shareholder register for these businesses is diverse in nature, and there is no undue influence on firms who place business with them, then we’re all good.
But if, for example, we see a move from an insurer, be they South African or other, to snap up a major stake in a listing platform to springboard its own vertical integration aspirations and ‘capture distribution’ (this is how big providers still refer to the advised market) then there is literally nothing to stop advisers voting with their feet.
Did I mention?
I’ve enjoyed writing this month’s offering. Too often in the past four-and-a-bit years it’s seemed that the platform market was in stasis; waiting for something. Maybe it was Transact’s move; maybe it was just pension freedoms, Mifid II and GDPR washing through the system. But I think we’re in for an exciting time over the next 12 months or so.
