US-based investment house Bain Capital has invested into a UK network of independent financial advisors, continuing a trend of private equity firms putting money into the wealth management sector.

The Openwork Partnership, a large UK financial advice network, has secured investment from global private investment firm, Bain Capital, subject to regulatory approval, to support its growth plans. The deal is expected to complete in the first half of 2025.

Openwork announced its plan in 2023 to find a minority investor to support the network’s growth plans. The Openwork partners voted over 98 per cent in favour of the proposed investment last week, with nearly 75 per cent of the partner shareholding voting, the firm said in a statement.

The transaction is an example of how private equity firms are buying wealth managers around the world (see this US-based analysis, for example). A few weeks ago, for example, CVC Capital Partners, Nordic Capital, and Abu Dhabi Investment Authority, bought Hargreaves Lansdown. The industry, characterised by asset-light businesses, high levels of fragmentation, and organic growth potential, has naturally attracted an abundance of interest from private capital players. Over recent years, private equity firms have led take-private transactions for AFH, Harwood, Mattioli Woods, Nucleus, Curtis Banks, IFG, Charles Stanley, and RBC Brewin Dolphin. Public-to-private transactions, often driven by valuation disparities and a lack of support from public investors, have proved to be a key catalyst in the trend towards further industry consolidation. (See an analysis of the trend here.)

The investment from Bain Capital, a private multi-asset alternative investment firm, will enable Openwork to capitalise on its market position across the wealth, mortgage, and protection advice sectors. Openwork said it will use the investment to progress its priorities which include enhancing the offering throughout the lifecycle of advisor firms, as well as investing in technology, and accelerating the partnership's growth.

Since its inception in 2005, Openwork has grown to a network of over 4,750 financial advisors who support clients across the UK. From 2018, Openwork has been 90 per cent owned by its 1,300 partners, which includes the principals of the network’s 860 advice firms. The remaining 10 per cent is owned by the firm’s employees.

Bain Capital is a private investment firm, managing over $185 billion of assets worldwide. Its consulting-based approach to private equity enables it to partner with the management teams of the firms it invests in. The firm also has a diverse set of investments in a range of industries allowing it to pool experience.

This is Bain Capital’s first direct investment in the UK financial advice space, but it brings experience from having invested in similar companies in the US and elsewhere, as well as having knowledge of the UK financial services sector, the firm added.

“At our National Conference last October we announced plans to bring a minority investor into the business to accelerate the growth of the Partnership. After a rigorous selection process, Bain Capital stood out as the obvious partner, through a clear alignment with our strategy and a recognition of the importance of our partnership culture,” Philip Howell, executive chair, said. “This investment will be transformative for the Partnership. It ensures that we will be able to continue to grow the business and deliver exceptional value and excellent outcomes for our clients and shareholders over the long term.” 

“This partnership is about working better together, leveraging our combined strengths to grow the Openwork network and deliver exceptional value to clients, employees and shareholders,” Elena Lieskovska, a Bain Capital partner, said. 

Openwork were advised on this transaction by Stephens Europe, acting as financial advisor, and Addleshaw Goddard, acting as legal advisor to Openwork Holdings, and Burges Salmon acting as legal advisor to Openwork Partnership. Slaughter and May acted as legal advisor for Bain Capital. 

The Openwork Partnership operates panels for pensions, annuities, and protection (life assurance, critical illness, general insurance). Omnis Investments, the investment arm of the group, offers a range of investment funds, managed by fund managers in the market, as well as a managed portfolio service. In the mortgage sector, the Openwork Partnership operates a panel of over 50 lenders for mortgages.