Merchant Capital confirmed today that it has acquired Keydata's structured products investment book and the remains of its third-party administration business for an undisclosed sum.
"Effectively, we want to become a leading player in the UK structured products market and this acquisition will give us the foundation to build on," said structured products director John Gracey.
Merchant Capital will act as plan manager of "all the blue chip-backed structured products issued by Keydata and Dawnay Day Quantum" together with products issued by a small number of independent plan managers, including the processing of income payments (from May), surrenders and maturities. Merchant Capital will be responsible for income payments from 27 April, although Keydata will be making income payments until the end of April. The Keydata book was worth £191m, according to PricewaterhouseCoopers (PwC).
The deal does not include products backed by SLS Capital and Lifemark or Hometrak, the special purpose vehicles wrapping Keydata's life-backed products. PwC will retain responsibility for these products. According to Gracey, Merchant Capital will now be managing 18,000 investment plans and 120 different products with £320m under management, "as well as having access to a database of existing investors."
The administration side of the business will be managed by Pritchard Stockbrokers, a private client investment management and stock-broking business with its head office in Bournemouth and ten branches throughout the UK: "We have chosen Pritchard because we have a common shareholding and they have helped us already with the integration of Arc Capital & Income," said Gracey. "We also wanted to have a separate entity to hold the money, as we don't want to face a situation similar to what happened to Arc and Keydata."
Merchant Capital made a move on Keydata back in March when Meteor Asset Management walked away from negotiations after its offer was determined to be too low by PwC. Merchant Capital recently took on the plan management business of Arc Capital & Income. It will write to IFAs and plan holders advising them of the change.
Keydata defaulted in June last year and was forced into administration by the Financial Services Authority (FSA) when it was discovered it would not be able to foot a multi-million-pound bill following the sale of non-compliant Isas backed by SLS Capital and Lifemark. No failings were found in its structured products business.
Merchant Capital's latest offer was accepted last Friday, 23 April.