Rival fund managers Premier Asset Management and Miton Group unveiled a £280 million all-share merger deal on Wednesday to beef up distribution and become a top five player in UK retail sales.
Premier Miton, as the new company will be known, will manage £11.5 billion of assets and be led by Premier chief executive Mike O’Shea.
Premier investors will own 70% of the combined group and Miton 30% under the all-share agreement.
“It gives us an opportunity to build a great business and develop faster than we would otherwise have done alone,” said Miton chief David Barron, who will onto the board as a non-executive.
“You need a degree of scale. We could clearly have gone on as an independent business but this enables us to get to a better position more quickly in one go.”
The two companies, which have existed as small-scale operations for several years, said they will maintain their culture of active management and retain Premier’s office in Guildford and Miton’s in London.
The two sides are part of a trend for mid-sized fund managers getting together to obtain better distribution of their funds.
Premier sells funds mainly through IFA and online investor platforms while Miton is strong in wealth management channels. The merger will mean they can cross-sell Premier Miton products through all the channels combined.
Cost savings will be £7 million per year by 2022 and the firm will also make money from a broader range of funds, reducing reliance on one or two large funds.
“Consolidation in the wealth and fund management space makes total sense, since the game is all about scale and distribution,” said finnCap analyst Nik Lysiuk.
“The quicker the mid-players realise this, the quicker they can come together and be the big players of the future.”
Miton’s top fund managers Gervais Williams, who owns 9%, and Martin Turner, who owns 6.7%, have agreed to the deal.
Premier chairman Mike Vogel will chair the combined group. Each side will get an equal number of board seats. Miton shares rose 25% to 51p. The deal values each share at 56.74p.
Liberum advised Miton and Fenchurch advised Premier.
