Ontario Teachers' Pension Plan, Toronto, will take a majority stake in U.K. wealth manager Seven Investment Management, expanding its exposure to the financial services sector — a core focus for the pension fund.
OTPP, which had C$249.8 billion ($188.4 billion) as of June 30, entered into a definitive agreement to acquire the stake from Caledonia Investments, an investment trust listed on the London Stock Exchange. Caledonia acquired its stake in 2015.
Caledonia said in a regulatory filing that it expects to receive about £255 million ($324 million) in cash proceeds, net of expenses, for the sale of its 7IM shares. The firm's holding in 7IM was valued at £187 million as of March 31, with a further £13 million to be invested into the business prior to completion of the sale.
An OTPP spokeswoman declined to comment on the financials beyond the Caledonia filing.
London and Edinburgh-based 7IM is a technology-driven wealth and investment manager, with about £21 billion in assets under management.
OTPP will back 7IM's current management team, with the firm retaining its existing strategy under CEO Dean Proctor's leadership, a news release said. OTPP will provide the management team with access to long-term capital and expertise to help with its growth plans over the next decade.
The U.K. wealth management sector is a core focus for OTPP, the news release added. The pension fund has already made more than C$10 billion in direct investments in the financial services sector. The investment is OTPP's first in the U.K. wealth sector, having followed the sector and 7IM for a number of years, the spokeswoman added.
"7IM is one of the highest-quality, fast-growing financial services platforms in Europe and a perfect example of our strategy to make control investments in our high-conviction sectors," said Inaki Echave, senior managing director at OTPP, in the release. "We intend to leverage our sector expertise and flexible capital to accelerate 7IM's growth organically and through M&A. We look forward to helping 7IM's first-class management team to fulfill their ambitious growth plans."
Mr. Proctor said in the same release that OTPP's investment "enables us to further enhance our client proposition and accelerate our growth to cement our position as one of the leading vertically integrated wealth managers in the U.K., underpinned by our award-winning platform and leading multiasset investment capabilities."
The deal is subject to customary closing conditions and regulatory approval.