STM Group, the AIM-listed cross border financial services provider known to many financial advisers for its pension transfer business, said today it has completed its acquisition of Harbour Pensions Ltd, a licensed retirement scheme provider based in Malta.
STM Malta Ltd received approval for its acquisition of Harbour Pensions from the Maltese regulator on Friday, STM said, and it said it plans to “begin integration process immediately, having already undertaken some preparation” since it formally announced its plans to acquire the Maltese business in November.
As reported then, STM explained the acquisition in the context of major changes taking place in the UK pension transfer marketplace, “post [the] March 2017 UK budget announcement” that saw the government introduce a new 25% charge on pensions transferred to most overseas jurisdictions.
In today’s statement, STM said the integration process was expected to take “in the region of six months” to complete, and that it believes the acquisition would be “moderately earnings enhancing in the first full financial year of ownership, with annualised profit contribution of £400,000 thereafter”.
In a statement accompanying the announcement of the completion of the Harbour Pensions acquisition, STM chief executive Alan Kentish described it as “a nice sized bolt-on acquisition for STM which will give a material uplift in the profitability of the STM Malta operation once fully integrated”.
“We believe that there will continue to be further consolidation in the Recognised Overseas Pension Scheme market in both Malta and Gibraltar, and STM’s opportunity, as well as challenge, is to be at the forefront of driving any such activity,” he added.
In announcing its plans to acquire Harbour Pensions last November, STM said the agreement had taken 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.
It described Harbour as consisting of 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.
Head office to UK from Gibraltar
In a trading update last month, STM announced that it was in the process of relocating its head office to the UK, from Gibraltar, where it was founded. It was among the first companies to offer pension transfers to Malta, which was first recognised as a jurisdiction to which UK pensions could be transferred at the end of 2009.
In that statement, Kentish noted that events in 2017 had resulted in “significant changes to our geographic footprint and business proposition”, including an “up-sizing” of STM’s UK business “and less reliance on our Gibraltar and Malta pension businesses”.
As reported, STM found itself the subject of an inquiry by Gibraltar’s authorities towards the end of last year, over what was said to have originated in an alleged failure to report to the authorities about a client who had been involved in a tax dispute. Kentish and at least one other employee were arrested but released without charge, as the company maintained that the allegations being made in connection with the matter had “no merit”.
In a statement to the London Stock Exchange on 30 October, STM Group didn’t name the client, but said the matter involved a dispute that took place between 2008 and 2013, and concerned Kentish’s role “as a professional director of a client company of STM”.
STM has maintained its registered office in the Isle of Man, and in addition to Gibraltar, Malta and the UK, has offices in Spain and Jersey.