Caledonia Eyes Takeover Of Wealth Firm Seven

Wealth manager Seven Investment Management is in advanced talks about a takeover by one of the UK's oldest investment trusts in a deal that will continue a recent flurry of corporate activity in the sector.

Sky News has learnt that Caledonia Investments, which traces its roots to the shipping empire established by Sir Charles Cayzer in 1878, is close to agreeing the purchase of a controlling stake in Seven IM.

People familiar with the talks said that an agreement was likely to be struck in the coming weeks, and would involve Caledonia acquiring the stakes in Seven IM which are owned by Zurich Insurance and Aegon, the asset manager.

Collectively, those two companies hold more than half of Seven IM's shares, with the remainder owned by its partners and other employees.

The takeover of Seven IM, which manages around £9bn, is expected to value the boutique wealth manager at approximately £100m, a source said on Tuesday.

The firm's partners are not expected to sell their shares as part of a takeover by Caledonia, which is said to have competed to secure a deal against a group of private equity firms, including Anacap, Corsair Capital and Graphite Capital.

Evercore, the investment bank, has been advising Seven IM's shareholders on the sale process.

Seven IM's head of corporate development, Justin Urquhart Stewart, is a prominent media commentator, while the firm is run by Tom Sheridan, its chief executive.

Insiders said that Seven IM's partners had been keen to attract a new investor with a long-term investment perspective.

Caledonia is a listed investment trust which manages a portfolio of international quoted, unquoted and fund investments, and has one of the longest unbroken runs of dividend increases on the London stock market.

Its largest unquoted holdings include Park Holidays, while it also owns significant stakes in public companies such as AG Barr, the soft drinks manufacturer, and Close Brothers, the financial services group.

According to material on its website, Caledonia seeks to invest £25m to £100m in private companies "either on a majority or minority basis in situations where it believes there to be a good opportunity for building value over the longer term".

In 2013, Seven IM made a pre-tax profit of £7.4m on turnover of £36.6m, with profits understood to have risen last year.

A string of deals has taken place in the wealth management sector recently, driven by the availability of private equity capital to drive consolidation, and a rising tide of regulation.

Caledonia declined to comment on Tuesday, while Seven IM could not be reached for comment.