PALAMON TO NET 13X RETURN ON TOWRY EXIT

Palamon Capital Partners (“Palamon”) has agreed the sale of Towry (“the Company”) to Tilney Bestinvest for £600 million, subject to regulatory approvals.  The sale will result in total Sterling investment returns for Palamon of 13 times invested capital.

Towry is one of the largest independent wealth managers in the UK with more than £9 billion of client assets, 85% of which are managed under discretionary investment mandates.  Towry employs more than 900 staff across 21 regional offices and offers award-winning investment management alongside highly skilled financial planning.  The combination of Towry and Tilney Bestinvest will create the leading UK wealth management firm for affluent and high net worth clients.

Palamon originally acquired John Scott & Partners, a small founder-led wealth manager with £250 million AuM in 2003, having identified the potential to build a national leader of scale in the highly fragmented financial advisory sector.  John Scott & Partners was acquired by Palamon in an off-market transaction and selected because it had a distinctive model of charging clients on a fee-for-advice basis, combined with a discretionary asset management service, as opposed to the prevailing commission based sales model.  Palamon led an ambitious buy-and-build strategy to roll out the John Scott model, which included the reverse take-over of Towry Law in 2006 and the acquisition of the UK subsidiary of Edward Jones in 2009, amongst others.

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In 2011 the UK Financial Conduct Authority announced that the long-awaited Retail Distribution Review would be implemented in 2013 compelling the industry to abandon commissions and adopt the same fee-for-service model Towry had successfully operated for years.  Palamon recognised that this disruptive regulation would provide a substantial consolidation opportunity and Towry went on to complete a further six acquisitions including the transformational take-private of Ashcourt Rowan plc in 2015, with £2.3 billion of discretionary assets under management.  As a result of its highly successful M&A and organic growth strategy the Towry group has, under Palamon’s ownership, grown revenues from £5 million to more than £120 million and client assets from £250 million to more than £9 billion.

Daan Knottenbelt, Partner at Palamon, said, “It has been a tremendous experience to have executed a transformational growth strategy that saw Towry develop from a single office in Marlow with £5 million of revenue to become a leading national wealth manager with £120 million of revenue and more than £9 billion of client assets.  This is another highly successful Palamon investment that demonstrates the power of our thesis-led strategy to identify, and invest into, long-term growth trends.  We are delighted that the sale of Towry will deliver another break-out return of 13x for our investors.  Our thanks go to the Towry management team and Board, who have executed the M&A plan to perfection and fulfilled the potential of this remarkable investment.”

Rob Devey, CEO at Towry, commented, “This sale is the culmination of our hard work over the last two years to complete the transformation of Towry to make it one of the national leaders in the UK wealth management sector.  It has been a pleasure to have worked closely with Palamon over this period, during which we more than doubled the EBITDA of the business whilst driving strong improvements in client satisfaction. Towry and Tilney Bestinvest are an excellent fit with both firms having highly skilled teams that provide top quality financial planning and investment management services to clients. Moving forwards the combined business will be able to offer an even wider range of services for clients and career opportunities for employees in all parts of the UK.”

Palamon’s uses a thematic investment strategy to identify and invest in service-sector businesses that are well-positioned to take advantage of long-term macro-economic trends. Typically the Firm seeks to acquire Founder-owned businesses that it can help to access new levels of growth, through institutionalisation and strategic and financial support. In 2013, Palamon realised its investment in Founder-owned Cambridge Education Group for a 14.6x investment return.  The Firm has continued to identify primary investment opportunities during 2015, acquiring control positions in three Founder-owned businesses: Currencies Direct, one of the largest specialist international payments providers in the UK; Il Bisonte, an Italian leather accessories brand with an established sales presence in Japan; and The Rug Company, the leading global retailer of designer luxury rugs.

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