By Oliver Smith on Thursday 29 July 2021
The banking giant hopes to capture some of the £10bn that its customers are currently investing elsewhere.
Looking to overhaul its famously tech-unsavvy Scottish Widows retirement savings arm as well as its investment offering, Lloyds Banking Group today snapped up fast-growing digital wealth group Embark.
Embark, which has over 410,000 consumer clients and £35bn of assets under management, will be used to “re-platform” its pensions and retirement offerings, as well as continuing to support Embark’s DIY wealth platform for consumers.
The deal, worth £390m and still subject to regulatory approval, does not include Embark’s Rowanmoor SIPP and SASS (small self-administered scheme) administration businesses, which are being held on to by existing shareholders, including fintech investor Chrysalis.
Chrysalis told its shareholders today that the sale would result in an estimated return (IRR) of around 63 per cent; its shares jumped 2 per cent today on the news.
“Embark has grown materially since our first investment, assisted by the funds we committed to complete value-accretive M&A, making it one of the UK’s fastest-growing digital retirement and savings businesses,” said Chrysalis co-portfolio managers Richard Watts and Nick Williamson, who added the deal would be their first trade sale.
For Lloyds, the bank said it needs to “meet more of its customers’ broader financial needs, whilst retaining more of the c.£10 billion assets under administration which customers invest with third parties each year”.
Indeed, whether from trading apps like Freetrade and Robinhood, robo-advisors like Wealthsimple and Wealthify, or online pensions providers like PensionBee, traditional banks are facing a growing challenge to keep their customers’ assets.
“There’s an ever-growing customer demand for clear, simple and affordable financial planning and retirement products and services,” said Antonio Lorenzo, CEO of Scottish Widows and group director of Insurance and Wealth for Lloyds Banking Group.
“Our acquisition of Embark will not only help us serve all of a customer’s financial needs in one place, but also sit alongside our existing partnerships which meet the more complex financial planning and investment requirements of mass-affluent and high net-worth customers through Schroders Personal Wealth and Cazenove Capital.”