Willis Tower Watson, Aon Hewitt and Mercer told to watch out... Xafinity eyes acquisitions to challenge "big three" rivals

Oliver Gill
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Xafinity listed on the London Stock Exchange in February (Source: Getty)

Recently listed pensions consultancy Xafinity is eyeing future acquisitions with plans to steal a march on its “big three” rivals.

The firm today posted its first set of annual results since its £190m float in February. Revenue for the year was one per cent higher at £52m, adjusted earnings rose by five per cent to £17.5m.

Read more: FCA plans to force advisers to prove value of leaving gold-plated pensions

“Acquisitions are a key part of strategy going forward and we continually review what options there might be in what is a fragmented market,” co-chief executive Paul Cuff told City A.M..

There are a number of pensions consulting firms of a similar size to us competing against one another in a market against the big three [Willis Tower Watson, Aon Hewitt and Mercer]. We do think there are opportunities to add economic value by consolidating.

“We are very excited about that as an opportunity, but there is nothing immediately on the blocks.”

Earlier today, the Financial Conduct Authority (FCA) gave the pension consultancy sector a stay of execution from a competition review. Last November, the FCA proposed referring the sector to Competition and Market Authority regarding concerns over conflicts of interest.

The big three joined forces and issued a series of promises to the FCA in response.

Consultancy firms such as Xafinity work with companies to better manage their defined benefit, or final salary, pension schemes. It aims to manage deficits before they cause significant financial headaches, such as those being afflicting the likes of BT and Royal Mail.

Read more: Royal Mail retires pensions scheme: The what, why and how

Cuff said: “We are generally trying to help our clients avoid getting into those situations by managing the pension scheme well for many years in advance.

We’re in the business of making sure people get their pensions in full.

Liberum analyst Rahim Karim said today's results were five per cent ahead of expectations. Nevertheless, shares in the firm in morning trading, currently down over 4.5 per cent.

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