A FINANCIAL services firm plans to spend up to £18m buying around 23 firms over the next couple of years and launch its own asset management business.
South Tyneside-based Moneygate has grown rapidly since it was launched six years ago and expects to turn over around £16m this year after taking over small finance advisory businesses nationwide, including 17 in the last year.
The business, which employs a core 36 staff in the North East and 120 financial advisers across the country, has confirmed backing of around £18m from its main investor to step up its acquisition drive.
Its backer, London-based Committed Capital, has agreed to fund the completion of deals to purchase 26 more IFA businesses which it says will help to increase its annual turnover to around £60m by 2016, by which time it expects to have £4bn of investor’s money under its management.
Chief executive Lee Hartley launched Moneygate after running an e-commerce and marketing firm which worked with investment firms including Axa, Zurich and Abbey.
He said: “We are looking to buy firms with a value of around £750,000 to £2m. I sign them up initially and am spending around £3.5m in total on that. When we [have worked] with them to measure and improve performance, then we will complete the deal.
“We have been expanding well and performing, and we expect to continue our expansion trajectory over the next few years.”
The business last year made a profit of nearly £2m and had signed terms with 24 IFAs with a collective turnover of £23m. It works by bringing a corporate model to small firms across the country. This sees it cutting costs while taking over some of the customer relationship and marketing work, and training up new advisers.
“We are creating an efficient. high quality service in a fragmented market. It will have offices across the country, but be based in the North East.” He is currently investing in a 10,000sq ft expansion at its head office to make room for training advisers. Moneygate is preparing to launch its self-service investment service Directif, and rebrand its core advisory business as Fairstone.