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The Ontario Teachers’ Pension Plan has agreed to buy British wealth manager Seven Investment Management, saying one of Canada’s biggest investors is betting on a rapidly consolidating sector.
OTPP will acquire 7IM, which was founded in 2002 and manages about $21 billion in assets, from Caledonia Investments, the companies announced on Tuesday. The deal will value 7IM at around £450m, according to people familiar with the matter.
The OTPP move comes as wealth asset managers grow in size amid rising costs and downward pressure on fees. But OTPP senior managing director Inaki Echave said the fund spent three years acquiring a UK wealth manager, pointing to some potential tailwinds for the sector.
“Further inflows will be driven by pension reforms, demand for wealth advisors is increasing and demographic trends mean governments will continue to encourage savings,” he said.
After the deal, OTPP will own 90% of the business and 7IM’s management will own the rest. Eight years ago, 7IM was bought by Caledonia, an investment trust linked to the Kaiser family, who made their fortunes in the shipping industry. Caledonia’s 7IM shares were valued at £187m at 31 March.
Canadian funds already have significant investments in the UK. Last year it bought a 25% stake in SSEN Transmissions, a division of Scottish energy company SSE, for £1.5bn. It also has stakes in London City, Bristol and Birmingham airports.
7IM joins OTPP’s more than C$10 billion direct investment in the financial services sector and the wealth manager will be part of its approximately C$60 billion private equity portfolio. 7IM Chief Executive Officer Dean Proctor will continue to lead the company after the closing of the transaction, which is expected by early next year.
“We are well positioned for our next phase of growth and bringing in new investors in Ontario Teachers is a natural and planned next step in the development of 7IM,” said Proctor. Stated. 7IM he took advice from Evercore.
OTPP plans to accelerate the expansion of 7IM, including through possible acquisitions. Based in London and Edinburgh, 7IM in the UK manages the assets of over 2,300 advisory firms and his 7,000 private clients.
Echave said OTPP could explore “bigger goals” in UK wealth management. “We have ambitions to build a larger player in this space .
OTPP is betting on an area where SMEs have struggled in recent years. A report released earlier this year by PwC said one in six asset managers or asset managers will be out of business or bought by a larger group by 2027. The report points to a combination of market volatility, high interest rates and fee pressure.
OTPP has approximately C$250 billion (approximately $180 billion) in assets and manages pensions for 336,000 teachers in Canada’s most populous province.
OTPP’s ability to invest in public equity alongside infrastructure, venture capital and real estate has generated an average annual return of 9.5% since its founding in 1990.
That model has been adopted across the Canadian public sector, The firm is part of Maple 8, a pension plan investment management firm that collectively manages approximately $1.5 trillion.
