Fairstone Group secures major investment with global private equity house

Fairstone is set to further extend its growth plans after completing a market-leading transaction with global private equity house TA Associates as all regulatory approvals were granted last week.

The deal, which marks a standout milestone in Fairstone’s progression, sees funds advised by TA take a significant stake in the business. TA Associates, which has raised $33.5 billion in capital since its inception, invests in profitable, dynamic companies around the world that demonstrate opportunities for strong sustainable growth.

This investment, for which the underlying valuation is not being disclosed, is the central aspect of a triple-boost for Fairstone. Current private equity backers Synova are also reinvesting into the group whilst current funders Alcentra has also increased the scale of the acquisition facilities available to the company. The investment bankers for Fairstone were Keefe, Bruyette and Woods (KBW) and legal advisers were Proskauer Rose LLP.

This series of developments will see no change to Fairstone’s business model or buy-out programme other than creating greater capacity to expand their overall acquisition activity with the benefit of a further strengthened capital base.

Lee Hartley, CEO of Fairstone Group said: “From a client perspective, our proposition and status as an independent, whole-of-market business remains completely unchanged. We fully believe in the value of being Chartered and our clients can be confident that this transaction only serves to enhance Fairstone’s ability to meet every single one of their financial planning and wealth management requirements.

“This is a multi-faceted deal and paves the way for us to march ahead with our build plan with the addition of a tremendously experienced global financial backer in TA. We believe they are the right people at the right time to help accelerate our strategy and we can start to put clear blue water between ourselves and some of our peers.

“The combined expertise and backing of TA, Synova and Alcentra means we have a deeper and wider foundation than ever before. We’ll use this foundation as a platform to do more deals with an emphasis on ambitious firms that are on a clear upward trajectory. We’re not looking to simply consolidate steady-state businesses – we want to invest in growth.”

As an additional demonstration of their confidence in the new partnership and the vision for the future, the entire senior management team of Fairstone are re-committing for at least another 5 to 10 years and taking the opportunity to invest a significant proportion of their capital back into the business.

TA, which has backed over 25 wealth and asset management firms worldwide, will work with Fairstone’s management team and Synova as the business embarks on an updated long-term plan to establish its position as the leader in the whole-of-market wealth advisory space.

Hartley added: “There are a number of new horizons for us – we want to offer a modern buy-out opportunity to ARs within networks, deploy our capital into the DFM space and also create a structure for businesses that we have already bought to perform satellite acquisitions themselves.

“The last few years have shown that sticking to the purity of our model really does drive results. We have worked extremely successfully with the team at Synova since 2016 and they have massively helped us to develop the business and played a key role in our transformation. We are delighted to have them remain on board for the next part of the journey.”

Fairstone Group will continue as a Newcastle headquartered business with a major London operation, serving clients from regional offices across the UK. The business completed 10 acquisitions in 2020 and expects deal volumes to rise in the coming years to support its aspirations for expansion.

Chairman of Fairstone Group, David Hickey, commented: “I’ve been with Fairstone for almost 10 years and have seen first-hand the development of the business in that time – it has been truly impressive. I’m particularly proud that the company has delivered such an exceptional return to all our earlier stage shareholders whilst also creating very meaningful value for a large number of our colleagues. This is a deal that we believe is genuinely in the best interests of all stakeholders. That really is something special.”

Fairstone was advised by KBW (financial adviser), Proskauer Rose (legal adviser) and management were advised by Wyvern Partners. TA Associates was advised by Evercore (financial adviser), Travers Smith (legal adviser) and PwC (financial due diligence).