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Merian Chrysalis lifts Embark stake on Zurich platform buy

27 November 2019

Private equity investment trust invests a further £12.2 million in Embark Group as rapidly expanding pension administrator looks to complete its acquisition of the Zurich investment platform.

Private equity investment trust Merian Chrysalis (MERI ) has invested a further £12.2 million in Embark Group as the rapidly expanding pension administrator looks to complete its acquisition of the Zurich investment platform.

The private equity investment company, which has raised £375 million to back growth companies aiming to float on the stock market, invested £14.9 million in Embark in July as part of a £39.4 million funding round backed by BlackRock and Legg Mason.

Today’s follow-on investment comprises of an £8 million equity investment and a £4.2 million convertible loan that can be switched into Embark equity in due course. It will lift Embark to 7.1% of Merian’s nine-stock portfolio.

Last week’s transaction is transformational for Embark, adding around £11 billion to its assets under administration that broke through £15 billion this year and bringing 130,000 clients.

Under chief executive Phil Smith the company has expanded by acquisition, forging a comprehensive retirement solutions business by absorbing the likes of Rowanmoor, the Adviser Centre and Hornbuckle in the past six years.

Its technology partner FNZ powers the investment platforms of RBS Coutts, Standard Life, Nutmeg, BestInvest, Charles Stanley, Moneyfarm and Wealthsimple. It broke into profit for the first time in July.

Merian co-fund manager Richard Watts said: ‘Since our initial investment, Embark has established itself as a disruptive force in the UK retirement and savings market. Embark will be a £33 billion assets under management franchise with exceptional balance across product, distribution channel and activity type.’

The Guernsey-based investment company also announced a $4.2 million top-up investment in TransferWise, bringing its stake in the online money transfer service to around £57 million, its largest holding at 17.6% of net assets.

The company is also backed by Augmentum Fintech (AUGM ) and fund manager Baillie Gifford.

Merian’s latest investment was bought from the open-ended UK smaller and mid-cap open-ended funds run by Watts and co-manager Nick Williamson. It acquired a £36.6 million stake from the funds in October at a small discount to their net asset value, although there was no detail on pricing this time.

The transfers comes as managers of open-ended investment companies look to reduce their exposure to unquoted companies after the collapse of Neil Woodford’s fund management business.

Merian raised £175 million in a share placing September, of which it has invested £92.5 million, meaning it has invested 69% of assets raised since its flotation a year ago. The shares, up 1p to 121p today, have risen 21% since their debut at 100p and stand at an 8% premium to their estimated NAV of 111.2p.

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