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Ex-Electra manager Epiris bags IFG in Strategic Equity boost

Ex-Electra manager Epiris bags IFG in Strategic Equity boost

Epiris, the private equity firm that ran Electra Private Equity (ELTA) for over four decades, has made a recommended cash offer for Irish financial services provider IFG Group (IFP) in a bid that provides a much-needed boost for Strategic Equity Capital (SEC).

Epiris, formerly known as Electra Partners until activist Edward Bramson seized control of Electra Private Equity and sacked the fund manager two years ago, has made a £206 million offer of £1.93 for IFG, which owns self-invested pension plan (Sipp) operator James Hay and wealth manager Saunderson House.

It is making the investment through Epiris II, its second private equity fund that raised £821 million from institutional investors last year.

London-listed IFG shares soared 43% or 57.5p to 190p, a two-and-a-half year high, just short of the offer set at a 46% premium over Friday’s closing price.

Shares in Strategic Equity Capital, a UK smaller companies trust that is 8.8% invested in IFG, its third biggest position, jumped nearly 2% or 4p to 206p. This is a tonic for a trust whose shares – trading 16% below net asset value – have struggled since the departure of its former star manager Stuart Widdowson two years ago.

John Gallagher, IFG’s former chairman who owns a 9.5% in the company, has given his irrevocable backing to the bid.

IFG chief executive Kathryn Purves said: ‘The offer by Epiris represents a compelling opportunity for shareholders to realise an immediate and attractive cash value for their shareholding in IFG today.

‘In addition, our employees and clients will benefit under the ownership of Epiris, which should help accelerate the delivery of IFG’s strategic objectives and the underlying strategies of James Hay and Saunderson House.’

Owen Wilson, a partner at Epiris, said: ‘We are delighted that the Board of IFG has recommended our offer and we are excited to work with management to realise the growth potential of James Hay and of Saunderson House and to further enhance their position in their respective markets.’

The announcement came as IFG reported 2018 results showing a modest operating profit of just £300,000, up from a loss of £400,000 in 2017. Adjusted operating profits – stripping out the costs of last year's cancelled sale of Saunderson House – jumped 18% to £12.4 million. The group had £30.2 billion of assets under administration or advice at the end of the year.

According to Refinitiv data, fund manager Alex Wright holds IFG in both the Fidelity Special Values (FSV) investment trust and Fidelity UK Smaller Companies fund.

Other funds benefiting from the bid include Brunner (BUT), a global trust managed by Lucy MacDonald at Allianz Global Investors, and Artemis UK Smaller Companies run by Mark Niznik and William Tamworth.

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