FINANCIAL SERVICES group IFG has expanded its reach in the Irish pensions market through its acquisition of two companies, Pensco and Nameridge.
Pending regulatory approval, IFG will pay a consideration of up to € 13.6 million for the two companies - € 5.9 million up front and an additional performance-based fee of € 7.7 million - as part of the firm's strategy to acquire recurring income pension companies.
IFG intends to integrate the activities of both Pensco, which has annual business revenues of about € 700,000, and Nameridge, which had turnover of € 830,000 in 2007, into its existing Irish group pension activities.
Gary Owens, chief executive of IFG Ireland, said that the financial services firm had set aside €45 million to acquire pensions companies, and in addition to these two deals it has two more targets which it hoped to acquire by year-end. "We believe that the potential in the financial services sector is in pensions," he said.
Pensco, which provides pensions administration and consultancy services and specialises in defined contribution group schemes, was established in 2005 by former KBC Asset Management (KBCAM) chief executive Gavin Caldwell, Samantha McConnell, also formerly of KBCAM and John McGovern, who co-founded pension consultancy Becketts in 1998.
Fexco owns a 67.46 per cent share of the company, with the balance held by Pensco board members and its executive management. In the year ended December 31st, 2007, Pensco had turnover of € 578,638 and a loss on ordinary activities before tax of € 1,063,838.
Fexco will net € 2.7 million in cash from the deal, while the balance of € 1.3 million will be shared between Pensco board members and executive management. The deal also consists of an earn-out arrangement, whereby up to € 3 million in cash may become payable to the directors of Pensco, based on the achievement of certain agreed turnover and profit thresholds in the period from completion to December 31st, 2012.
IFG has also completed the acquisition of Nameridge Limited, the corporate pensions division of Pension Systems Limited, which had traded as PSL Consulting. Nameridge was established by Noel Kierans in 1969, and since 2003 has been jointly owned with Seamus Keane. Financier Dermot Desmond is a non-executive director of the firm, and will not benefit financially from the sale. Mr Kierans and Mr Keane will now concentrate on credit union business, Le Chéile Consulting.
Nameridge provides management, administration and advisory services to the defined contribution pensions sector, and annualised profit at the firm is estimated at in excess of € 500,000.
IFG is paying €3 million for the firm - € 1.8 million paid in cash on completion, while deferred consideration of €1.2 million is subject to achievement of agreed turnover thresholds in the two-year period from completion. Further consideration of up to € 3.5 million may be payable based on achievement of agreed targets in the three-year period from completion.
