Just before Christmas, Canada-based Fiera Capital agreed to acquire an 80% stake in Palmer Capital in the latest in a long list of M&A deals involving UK fund managers.
In the past couple of years, firms including Rockspring, Lothbury Investment Management, Mayfair Capital, Internos and Tristan Capital have either sold their businesses entirely or sold significant stakes.
Under Palmer’s agreement with Fiera, which has £100bn of assets under management, the UK business will remain independently managed and will continue to be branded as Palmer Capital.
Property Week caught up with Palmer Capital chief executive Alex Price to find out why it decided to sell up and what the future holds for the business under Fiera’s ownership.
Had you been actively looking to sell the business?
We’ve been looking for ways to accelerate our growth for some time. Having come close to doing a deal with another buyer three years ago, we were open to becoming part of a larger organisation but only if it was the right fit.
How did the deal with Fiera come about?
Fiera approached us through an intermediary early last year. It was looking to grow its real estate business and grow outside its traditional North American market. We recognised a likeminded organisation with a similar sense of entrepreneurship and integrity – we didn’t want to join a business that would see us just as a way to push money out of the door.
What impact will the deal have on Palmer Capital?
The deal gives us access to North American investors that have been harder for us to reach because we don’t have a presence on the ground. We wanted to create a shareholder base for the next stage of our growth and allow some of our existing investors to exit. It also gives us the opportunity to work more efficiently when it comes to technology and digitisation.
How does the deal help Palmer Capital pursue its tech agenda?
For a business of our size, a really big investment is in innovation and future-proofing our business and our buildings. We’ve taken a view that unless you’re prepared, you’ll be left behind.
“Unless you’re prepared, you’ll be left behind”
We’re committing more and more resource to this and being part of a larger organisation means we can spread that cost with our sister company in Canada.
Will the deal with Fiera affect Palmer Capital’s business model of backing regional property companies?
Not at all. We will continue to back new property companies as we consider it to be one of the best ways to access entrepreneurship and find value across the real estate markets of the UK. With Fiera’s support, we can also grow our fund mandates and access to capital. The UK spends so much time agonising over Brexit, it’s great to be part of an organisation like Fiera that takes a long-term view.
A number of UK fund managers have sold their businesses in the past couple of years. Is it a sign that the market is about to turn?
We think that the deal shows valuations ascribed to talent and organisations today are high, but this is not a call on the real estate market. We see opportunity in 2019 whichever way Brexit goes, whether for core or for value-add. Last year, we bought £250m of property and sold £240m. This year will be another busy year as we continue to invest in grade-A urban assets in the PRS space and in land for the development of homes that are affordable to ordinary people.
Originally featured in Property Week in January 2019, written by Guy Montague-Jones.