STM Group suspends shares, plans to acquire Malta’s Harbour Pensions

STM Group, the Gibraltar headquartered, AIM-listed cross border financial services provider, said today that it had agreed, on Friday, to acquire  Harbour Pensions Ltd, a licensed retirement scheme provider based in Malta.

The purchase price and details of the acquisition weren’t given “for commercial reasons”, but in a statement to the London Stock Exchange this morning, STM said it would be funded entirely from existing cash reserves.

STM said the agreement took the form of a sale and purchase agreement with Harbour Pensions’ shareholders,  and involved the entire issued share capital of Harbour as well as its related pension trust schemes.

STM Group shares were suspended from trading this morning ahead of the announcement.

Harbour, according to STM, incorporates a licensed retirement scheme administrator which incorporates four registered pension schemes with some 1,600 members and audited revenues in the year to the end of December 2016 of £1.1m.

The acquisition is subject to the approval of the Malta Financial Services Authority, the statement noted, adding that this “generally takes a few months”.

Straightforward ‘bolt-on’

In its statement, STM said its board viewed the acquisition as a “straight forward ‘bolt-on'” to its existing Malta business, “complementing the existing circa 7,500 QROPS members and delivering recurring annual revenues in excess of £800,000 per annum”.

It said the complete integration of the Harbour business is expected to take in the region of six months, after which it expected  the deal to deliver cost synergies and economies of scale of some £400,000  on an annualised basis.

As reported, STM last year announced it was to acquire the UK-based SIPP provider, London & Colonial, for around £5.4m.

News of STM’s acquisition of Harbour Pensions comes two weeks after the company revealed, also in a statement to the London Stock Exchange, that STM chief executive Alan Kentish had been arrested more than a week previously for allegedly failing to disclose information to Gibraltar’s authorities about a client who had been involved in a tax dispute between two jurisdictions. STM said at the time that it had been advised that the allegations had “no merit”.

A few days later it was revealed that a second STM employee had been arrested at the same time as Kentish, and the company issued a statement  reiterating that there were “no merits to the allegations  [against Kentish] and the board of STM remains fully supportive of him.”

Today, in the statement to the LSE, Kentish said the acquisition of Harbour would “further build our book of business in Malta and allow for additional profit uplift from this jurisdiction”.

He added: “”Harbour is a good solid business, and the acquisition by STM is a win-win for all parties, giving a sensible exit route for the existing [Harbour] shareholders [while] at the same time ensuring that their existing QROPS members are well looked after going forward.

“As predicted, the QROPS landscape in Malta and Gibraltar was always going to change significantly post March 2017 UK budget announcement.”

He said STM would continue to “seek other consolidation opportunities in the QROPS market”.

‘Five-year plan’

Justin Caffrey, managing director of Harbour, explained his company’s decision to accept the STM bid by noting that the Maltese company “was always a five-year plan for the team, and we are rapidly approaching the end of this period”.

“As entrepreneurs, this move allows us to focus on our other investments within our portfolio,” he added.

In April, Harbour Pensions sales and marketing director Rebecca Fleming was quoted as saying that Harbour was “still focusing its efforts on the [registered overseas pension schemes]  market despite the shock announcement” in March, by UK chancellor Phillip Hammond, that the UK government was to introduce a new 25% charge on pensions transferred to most overseas jurisdictions.

This, Fleming said, reflected Harbour Pensions’ belief that there would be an increase in interest in such transfers, particularly in regions with a double tax agreement in place, such as the European Economic Area.

 

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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