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The Ontario Teachers’ Pension Plan has agreed to buy a majority stake in UK wealth manager Seven Investment Management from Caledonia Investments for £255mn.
The deal underlines the pressure UK wealth managers face to bulk up as they grapple with rising costs and increased competition.
7IM, based in London and Edinburgh, runs £21bn in assets for more than 2,300 advisory firms and 7,000 private clients across the UK. The Ontario Teachers’ fund, which has almost C$250bn ($180bn) in assets, manages the pensions of 336,000 teachers in Canada’s most populous province.
“We intend to leverage our sector expertise and flexible capital to accelerate 7IM’s growth organically and through M&A,” Iñaki Echave, senior managing director at the Ontario Teachers’ Pension Plan, said in a statement on Tuesday.
The acquisition of 7IM adds to the more than C$10bn in direct investments the pension fund already has in the financial services sector. Following the deal, 7IM will continue to be led by chief executive Dean Proctor.
“We are well positioned for our next phase of growth, and introducing a new investor in Ontario Teachers’ is a natural and planned next step in the development of 7IM,” Proctor said.
7IM was bought eight years ago by Caledonia, an investment trust linked to the Cayzer family that made its fortune in the shipping business. Caledonia’s stake in 7IM was valued at £187mn as of March 31. The sale to Ontario Teachers’ is expected to be completed by early next year.
The ability of Ontario Teachers’ to invest in public equities alongside infrastructure, venture capital and property has helped it deliver average returns of 9.5 per cent a year since it was set up in 1990. Its model has been adopted across Canada’s public sector.