Private equity firm Cinven acquires True Potential

Newcastle-based True Potential will sell a majority stake in the business to Cinven, an international private equity firm with substantial interests in financial services.

Rumours about the deal have been swirling through the markets in recent weeks.

The acquisition marks the latest move by private equity firms to take controlling stakes in many UK wealth managers and Financial Planners.

Financial details of the transaction are not being disclosed but reports suggest the deal potentially values True Potential at between £1.6bn and £2bn. 

While the figure is substantial it is less than the £2.5bn valuation True Potential is believed to have been targeting.

The deal will mean potential windfalls of hundreds of millions of pounds for chairman and founder David Harrison and his son Daniel who is CEO.

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True Potential operates a broad wealth management business and has its own investment platform and fund arm. It has more than 1.4m retail clients in the UK.

The North East firm was founded in 2007 by chairman David Harrison and CEO Daniel Harrison. The business employs more than 350 and works with 800 restricted advisers. The firm claims that about 1 in 5 of the financial adviser market in the UK uses True Potential’s technology and support services.

True Potential is expected to have over £20 billion of assets under management and to generate about £135m of EBITDA for the year ending 31 December 2021.

Cinven’s Financial Services team identified True Potential as a “compelling investment opportunity” with several key attractions, Cinven says.

True Potential chairman David Harrison said: “We identified Cinven as the right partner for True Potential’s next phase of growth due to their Financial Services and TMT (technology, media and telecoms) expertise.

“Their investment will enable us to continue to deliver on our mission to revolutionise the way wealth management is provided. We have a shared vision and I am certain that this investment in True Potential alongside the existing management expertise will deliver continued growth for many years to come.”

The deal is subject to regulatory approval.

Daniel Harrison, CEO of True Potential, said: “Our aim in this process was always to find the right partner with the same values that would benefit our clients, financial advisers and staff. In Cinven we have found that partner.”

Caspar Berendsen, partner at Cinven, said: “True Potential has a truly differentiated business model within the UK wealth management sector, where there are strong structural growth drivers. The company provides attractive services and products to financial advisers and their clients, using technology to anticipate and meet customer demands in the future as well as now.

“The combination of Cinven’s longstanding track record in both financial services and TMT, along with True Potential’s strong management team and integrated business model, will support the company’s future growth. In particular, this transaction will enable continued investment in True Potential’s financial adviser recruitment and its technology platform.”

Cinven has made a number of financial services investments in recent years and owns a large stake in Miller, a specialist insurance and reinsurance broker; Compre, a specialist global consolidator of closed books of non-life insurance policies and NewDay, a UK consumer finance company.

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