Caledonia Investments’ acquisition of a majority stake in Seven Investment Management will allow the firm to think long-term and retain its independence, 7IM chief executive Tom Sheridan says.
Aegon and Zurich Insurance sold their stakes in 7IM, with the £1.6bn Caledonia investment trust investing up to £77m in cash to acquire 94 per cent of 7IM Holdings. The deal values the investment manager at £100m.
7IM’s management team will pay £5m for the remaining equity, with the balance provided by £25m of bank debt, which Caledonia has agreed to underwrite if it is not in place by completion.
7IM chief executive Tom Sheridan says: “We are going to remain independent, we are going to continue to be longer term thinkers. The objective behind trying to do business with Caledonia was not to have dramatic change in the business, it’s possibly boring but it’s more of the same.”
A number of private equity firms were among the double-digit number of bidders for the business, but Sheridan says Caledonia stood out from the start as a long-term investor.
He says: “The average length of holdings for Caledonia in unquoted businesses is over 11 years, so it’s not three to four years and all change again.
“Indeed that was one of the reasons that we found Caledonia so attractive as they are in a position to do that as they are investing their own money.”
Aegon and Zurich have been hands-off in their approach to 7IM, but that may change under the new ownership.
Sheridan says: “I think Caledonia described it to me as not hands-on but not hands-off either; ‘hands with’ if you will.”
While the management committee will remain the same and be made up of 7IM staff, the executive committee will have Caledonia representatives where Zurich and Aegon previously sat.
Caledonia head of unquoted investments Duncan Johnson says: “We look forward to supporting Tom Sheridan and his team in building on 7IM’s impressive growth record and strong investment performance to service an expanding UK wealth management market where there is a growing demand for multi-asset and multi-manager funds.”
Sheridan says the challenges ahead for 7IM are dealing with the changing financial space, including the debt-ridden and QE-laden markets the business currently operates in.
Internally the main business challenge is “our ability to continue to execute the business plan,” he says. “That’s our major risk, but it has been that way for years.”
The deal is subject to FCA approval.