Fairstone Group Secures Major Investment with Global Private Equity House TA Associates Alongside Current Backers Synova
Fairstone is set to further extend its growth plans after completing a market-leading transaction with global private equity house TA Associates as all regulatory approvals were granted last week.
The deal, which marks a standout milestone in Fairstone’s progression, sees funds advised by TA take a significant stake in the business. TA Associates, which has raised $33.5 billion in capital since its inception, invests in profitable, dynamic companies around the world that demonstrate opportunities for strong sustainable growth.
This investment, for which the underlying valuation is not being disclosed, is the central aspect of a triple-boost for Fairstone. Current private equity backers Synova are also reinvesting into the group whilst current funders Alcentra has also increased the scale of the acquisition facilities available to the company. The investment bankers for Fairstone were Keefe, Bruyette and Woods (KBW) and legal advisers were Proskauer Rose LLP.
This series of developments will see no change to Fairstone’s business model or buy-out programme other than creating greater capacity to expand their overall acquisition activity with the benefit of a further strengthened capital base.
Lee Hartley, CEO of Fairstone Group said: “From a client perspective, our proposition and status as an independent, whole-of-market business remains completely unchanged. We fully believe in the value of being Chartered and our clients can be confident that this transaction only serves to enhance Fairstone’s ability to meet every single one of their financial planning and wealth management requirements.
“This is a multi-faceted deal and paves the way for us to march ahead with our build plan with the addition of a tremendously experienced global financial backer in TA. We believe they are the right people at the right time to help accelerate our strategy and we can start to put clear blue water between ourselves and some of our peers.
“The combined expertise and backing of TA, Synova and Alcentra means we have a deeper and wider foundation than ever before. We’ll use this foundation as a platform to do more deals with an emphasis on ambitious firms that are on a clear upward trajectory. We’re not looking to simply consolidate steady-state businesses – we want to invest in growth.”
As an additional demonstration of their confidence in the new partnership and the vision for the future, the entire senior management team of Fairstone are re-committing for at least another 5 to 10 years and taking the opportunity to invest a significant proportion of their capital back into the business.
TA, which has backed over 25 wealth and asset management firms worldwide, will work with Fairstone’s management team and Synova as the business embarks on an updated long-term plan to establish its position as the leader in the whole-of-market wealth advisory space.
Hartley added: “There are a number of new horizons for us – we want to offer a modern buy-out opportunity to ARs within networks, deploy our capital into the DFM space and also create a structure for businesses that we have already bought to perform satellite acquisitions themselves.
“The last few years have shown that sticking to the purity of our model really does drive results. We have worked extremely successfully with the team at Synova since 2016 and they have massively helped us to develop the business and played a key role in our transformation. We are delighted to have them remain on board for the next part of the journey.”
Fairstone Group will continue as a Newcastle headquartered business with a major London operation, serving clients from regional offices across the UK. The business completed 10 acquisitions in 2020 and expects deal volumes to rise in the coming years to support its aspirations for expansion.
Chairman of Fairstone Group, David Hickey, commented: “I’ve been with Fairstone for almost 10 years and have seen first-hand the development of the business in that time – it has been truly impressive. I’m particularly proud that the company has delivered such an exceptional return to all our earlier stage shareholders whilst also creating very meaningful value for a large number of our colleagues. This is a deal that we believe is genuinely in the best interests of all stakeholders. That really is something special.”
About Fairstone – www.fairstone.co.uk
Fairstone is one of the fastest growing financial services organisations incorporating one of the largest CII Chartered financial planning firms in the UK, with fee income in excess of £70 million. The group operates across 42 locations with a head office in Newcastle and a city office and is made up of financial management, private wealth, corporate solutions, mortgage solutions and estate planning channels. Fairstone integrates high quality financial advisory firms and IFAs throughout the UK, operating a unique Downstream Buyout Model for IFA firms, which has led to the incorporation of 54 firms since 2011. Today, Fairstone is a national firm made up of 380 regulated advisers and 275 operational staff. We oversee more than £10.6 Billion in funds under management on behalf of 34,000 wealth management clients. The firm’s investment management arm administers a range of managed portfolios and Fairstone has maintained a 5-star Defaqto rating for their core model portfolios for six consecutive years.
About TA Associates – www.ta.com
TA Associates is a leading global growth private equity firm. Focused on targeted sectors within five industries – technology, healthcare, financial services, consumer and business services – TA invests in profitable, growing companies with opportunities for sustained growth, and has invested in more than 500 companies around the world. Investing as either a majority or minority investor, TA employs a long-term approach, utilising its strategic resources to help management teams build lasting value in high quality growth companies. TA has raised $33.5 billion in capital since its founding in 1968 and is committing to new investments at the pace of over $3 billion per year. The firm’s more than 100 investment professionals are based in Boston, Menlo Park, London, Mumbai and Hong Kong.
About Synova – www.synova.pe
Synova is recognised as one of Europe’s most innovative growth investors. They are currently investing in their fourth generation £365m fund, raised in 2019, which continues to focus on their core sectors: Business Services, Financial Services, Health & Education, and Technology. Synova has generated industry-leading returns in the UK, which has been reflected in being awarded ‘UK Private Equity House of the Year’ four times in the past seven years.
About Alcentra – www.alcentra.com
Alcentra is a global asset management firm with over $43 billion of assets under management as of Jan 31, 2021 (including accounts managed by Alcentra NY, LLC, Alcentra Limited, and assets managed by Alcentra personnel for affiliates under dual officer arrangements).
Alcentra work with investors around the world to help them make the most of the market opportunities through a large range of investment funds. Alcentra is a subsidiary of The Bank of New York Mellon Corporation and is headquartered in London, with offices in New York and Boston as well as representatives in Singapore and Hong Kong.**