Tilney and Smith & Williamson seal £1.8bn merger as Warburg PIncus steps in

The new structure will see Warburg Pincus emerge as the second-largest shareholder in the group

The UK regulator objected t the original structure of the deal

Tinley and Smith & Williamson, two of the UK’s largest wealth management firms, have cemented plans to merge after an intervention by US private equity firm Warburg Pincus.

The £1.8bn merger was originally announced last September and will create a group with £44bn of assets under management and £530mln of revenues.

According to reports over the weekend, Warburg Pincus will inject £250mln into the new group, which will be called Tilney and Smith & Williamson.

That is expected to be sufficient for the deal to be granted regulatory approval.

In January, UK financial watchdog the FCA raised concerns over the structure of the merger and is said to have demanded £200mln of new equity to be raised to reduce its debt and bolster its financial position, according to the reports.

The new structure will see Warburg Pincus emerge as the second-largest shareholder in the group behind another private equity firm, Permira.

Canadian group AGF, currently Smith & Williamson’s largest shareholder, will sell its stake following the merger.

Tilney and Smith & Williamson will rank as the UK’s fourth-largest wealth manager behind groups such as St James’ Place and Quilter.

Chris Woodhead, Tilney's chief executive, said he was delighted by investment from Warburg Pincus.

“This is a real vote of confidence in what we are building and its prospects and we look forward to progressing the deal through to completion in the coming months.”

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