Actuarial company Xafinity is on the market to acquire using proceeds from its upcoming initial public offering, in hopes of becoming the dominant player in the pension consultancy market.
The company is set to float on the London Stock Exchange on Thursday (16 February) and has already raised £179.6m with a market capitalisation of £190.3m, and is expected to raise £46m net proceeds.
The move is part of Xafinity’s effort to position the group for its next stage of development, which will include a focus on acquisitions.
Paul Cuff, co-chief executive of Xafinity, said that there’s “no doubt that acquisitions will be easier to pursue in the future” once the company is publically listed and has a source of capital to act if a company that supports the wider vision of the business becomes available.
“We would consider any acquisitions that were consistent with our vision, which is to become the preeminent mid-tier pensions firm.
“They’d have to work from a culture perspective for our people and our clients but we would look at anything that’s consistent with our culture and ambition and what we want to achieve,” Mr Cuff said.
Xafinity’s separate self-invested personal pension and small self-administered scheme business have undergone a number of acquisitions in recent years, and Mr Cuff said that it would continue to “look proactively for those”.
Mr Cuff continued that the main pension consultancy business could look to take advantage of fragmentation in the market, and that consolidation with a similar business would be the easiest acquisition the firm could make.
“For our core pensions business the mid-tier of pensions consulting firms is reasonably fragmented. There are quite a few firms of similar size and operating with similar kinds of products and so we think there is a potential opportunity for consolidation in that market.”
A move to acquire a similar business would help Xafinity differentiate itself from its main competitors, such as Mercer and Willis Towers Watson, but in the meantime the firm will focus on organic growth.
“I think a nimble, tech-enabled player like us can grow organically against those larger firms. I think we genuinely can provide a better service than they do often for a substantially lower cost and that was really beginning to tell in our market.
“We’re seeing a lot of that. I do think if you consolidated a couple of firms together then people would become ever more aware of that potentially.”
