Private equity-owned platform James Hay is to buy rival Nucleus Financial for £145m in an all-cash deal announced today.

James Hay, owned by Epiris, will pay 188 pence per share for the business in a deal which is subject to regulatory and shareholder approval.

The takeover is expected to be completed in the second quarter of 2021 and the combined business will have Assets Under Advice of an estimated £45bn.

James Hay says that the deal will mean advisers and customers will benefit from the two firm’s combined expertise.

The sale of Nucleus was sparked by major shareholder Sanlam deciding to sell its stake last year. 

Initially four bidders emerged, including platform rival Transact which is believed to have tabled an offer.

James Hay says there will be no immediate change for advisers but over time the underlying platform technology will be provided by ‘platform engine’ FNZ and assets migrated from Nucleus to FNZ which provides James Hay’s platform system.

The firms says the transaction will create “one of the UK’s leading independent adviser platforms.”

The combined platform will be “a Financial Planning and retirement focused adviser platform.” 

The larger scale of the business will enable bigger investments in technology, technology, products and services,  the firms says. It will offer a range of products including SIPP and drawdown features among a “broad range of tax wrappers” including ISAs, GIAs, onshore and offshore bonds.

Separately, James Hay has entered into a long-term strategic partnership with FNZ for platform technology and outsourced administration services.   

The board of Nucleus has agreed the deal and is recommending that shareholders, some of them advisers, vote in favour of the deal. 

Sanlam UK, which owns 52.19% of Nucleus, along with the Nucleus board, which owns 2.36%, have agreed to vote in favour of this transaction. 

Richard Rowney, CEO of James Hay, said: “We are excited to be announcing the acquisition of Nucleus, which on completion will create one of the leading, independent, adviser platforms, with over £45 billion of AUA. The two businesses have complementary areas of expertise and common beliefs about the importance of independence and only serving the adviser market.  

“We admire much about Nucleus and the skills within its team, and look forward to working with them to better serve the growing needs of advisers. By joining forces, we can combine Nucleus’s reputation for great digital user-experience and James Hay’s pension specialism, creating greater strength and a platform with the scale to invest and deliver real value for advisers and their clients.” 

David Ferguson, CEO of Nucleus, said: “Since we launched in 2006 we've always put the customer centre stage and while that has made us a little bit different it’s carried us to £17.4bn in AUA and to a point where the sentiment of our users and our people has never been better. 

“Becoming part of this enlarged group gives us a key role in a much bigger story where we can create a leading independent platform of scale with a high tech, high touch proposition and philosophy. I think the combination of our people’s talents and the size of the opportunity can see us carefully navigate the roadmap to deliver on this collective medium-term goal. I look forward to getting to know our new colleagues and moulding a group culture that is centred on doing the right thing and building a market-defining product that really delivers for advisers and their clients.”

James Hay has Assets Under Advice of £27.6bn and Nucleus Financial £17.4bn as of December.