US private equity house takes majority stake in £100m Thomsons

US private equity house ABRY Partners has taken a majority stake in Thomsons Online Benefits in a deal that values the firm at around £100m.

Michael Whitfield, CEO at Thomsons says the cash injection will fund expansion of the firm’s UK and overseas operations, allowing it to continue to deliver pension consultancy services to firms facing their auto-enrolment obligations at a time when the RDR is expected to make advisory services more scarce.

The firm says it will develop further the Thomsons Academy, increasing learning and development support for its’ own employees, clients and providers, as well as recruiting 150 more people over the next three years.

Existing angel investors Pi Capital and Westminster Growth Capital are replaced as ABRY Partners takes a majority share in the Thomsons business.

The remaining shares are held by the existing management team and staff led by CEO Michael Whitfield and Managing Director Chris Bruce, who together founded the company in 2000.

Thomsons Online Benefits has just closed the year ending December 2012 with revenues of £32.6 million and earnings (EBIT) almost trebling to £7 million compared with £27.3 million and £2.5 million respectively in the prior year.

Whitfield says: “Auto-enrolment is a ticking time bomb for UK mid-sized firms and their employees, with 30,000 employers facing their staging dates in the three months following April 2014. If you couple this with RDR (the Retail Distribution Review) which is driving advisers away, businesses are discovering right now that they need help more than ever to understand and implement auto-enrolment and engage their employees in the process.

“Without the belief and support of both Pi and Westminster over the past eight years we would never have got to this strong position, and we are extremely grateful for their backing and support,”

Brian St Jean of ABRY Partners says: “Thomsons has had a period of phenomenal growth and success within the last 12 months especially, seeing earnings almost trebling.

“If you add this to their award winning technology, strong management team, impressive growth over the last ten years, and massive UK and global market opportunities, then this was too good an opportunity to miss. We are really excited to be investing in Thomsons at a time when both the UK and global markets that they lead are at a tipping point. We back Thomsons heavily to dominate its space for many years to come. We will also be looking for other investment opportunities in the UK and abroad in the near future”.

David Barral, CEO at Aviva UK, says: “With many advisers facing an uncertain future, this investment is a clear statement of intent from Thomsons. The pensions industry needs companies like them to continue to flourish to make sure employers understand key changes like auto-enrolment, and to help their employees get better member outcomes in retirement. I am sure they will go from strength to strength”.