QROPS provider STM acquiring SIPP specialists London & Colonial, as profit slips

STM Group, the Gibraltar-based, London Stock Exchange-listed company that built its name on providing QROPS to people wishing to transfer their UK pensions abroad, is to acquire UK SIPP provider London & Colonial for around £5.4m (US$7.2m,  €6.4m).

STM revealed the purchase alongside its first-half results statement yesterday, which saw its pre-tax profit fall to £1.2m from £1.4m in the same period a year earlier.

However, earnings per share more than doubled, to 2.27p a share from 1.38p, and recurring fees rose to 73% of revenue, from 66% in the first six months of 2015.

STM said it was acquiring London & Colonial as it looked to expand its range of pension options for its clients.

In a statement accompanying the results, STM chief executive Alan Kentish said trading in the first four months of the year had fallen “short of management’s expectations” and impacted profitability, but that a “pricing initiative implemented…during April” had resulted in “a significant pick-up of new business”.

As for the acquisition of London & Colonial, Kentish added: “Not only does the acquisition get STM a foothold into the UK SIPP market, it also brings with it a number of bolt-on consolidations in the QROPs and life assurance business.

“These will bring STM further economies of scale, and will potentially free up regulatory capital in the medium term to fuel further growth.”

STM said an interim dividend of 0.5 pence share would be paid, following the reinstatement of its dividend policy earlier in the year.

SIPP providers in demand

STM’s acquisition of London & Colonial comes as SIPP providers are in demand, as changes to the UK’s pension legislation that took effect in April of last year have boosted take-up of self-invested personal pensions, and, some say, QROPS are somewhat less popular than they were.

As reported, Praemium, the Australia-based platform and separately-managed account provider, announced last week that it is to acquire UK SIPP provider Wensley Mackay for £600,000, subject to Financial Services Authority approval.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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