Wealth manager Tilney scores year of record profits as private equity backer continues to consolidate the sector

Lucy White
English Gold Rush
The business, which offers investment services to wealthy individuals, families, charities and professionals, increased profits by 268 per cent. (Source: Getty)

If a financial planning and investment company can almost quadruple its profits in a year, it seems to send a good signal to its customers.

At least that is what Tilney will be hoping, having increased its earnings before tax, depreciation and amortisation (Ebitda) by 268 per cent last year as it celebrated its 180th anniversary.

The business, which offers investment services to wealthy individuals, families, charities and professionals, ballooned the amount of assets it manages from £9.4bn in 2015 to £22.4bn last year and more than doubled its adviser workforce to 328 staff.

Yet rather than indicating a rapid expansion in the number of clients seeking Tilney's services, the growth is underpinned by a wily expansion strategy funded by private equity.

Permira, a UK-based private equity firm which is currently investing funds worth €7.5bn, created the wealth manager in its modern form when it bought then-struggling Tilney from Deutsche Bank in 2014 and merged it with Bestinvest, a business it had acquired a year earlier.

The firm had an ambitious plan to consolidate the sector, which has so far proved profitable. Last year it supported Tilney's £600m buyout of Towry, a smaller peer which had itself hoovered up a number of its competitors, and the acquisition of modestly named Ingenious Asset Management.

“2016 was a record breaking year for Tilney, with the landmark acquisitions of Towry and Ingenious Asset Management and strong investment returns for our clients propelling our assets under management 138 per cent higher,” said the business's chief financial officer Wadham Downing.

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It is important to note that Tilney's impressive-sounding results are in fact extrapolations – calculations of what earnings and revenues might have been had the wealth manager owned Towry and Igenious for the whole year.

Yet the leap of faith is not too hard to make, since both businesses were acquired within the first four months of 2016 and the existing business also recorded growth.

“The gross new money per adviser of £10m demonstrates the strong organic growth achieved at the same time as the Towry and Ingenious integrations were taking place,” said Tilney's chief executive Peter Hall.

With private equity firms generally aiming to hold onto companies for around five years, Tilney's owner Permira may soon be looking to make its retreat.

Following these latest results, the firm will doubtless be hoping to make a strong return when it does sell up.

Towry, though smaller, set a good example of what may be achieved – on selling the company to Tilney, Towry's private equity owner Palamon made more than 13 times the money it invested.

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