The City tycoon Michael Spencer is in advanced talks to back the online investment platform AJ Bell in a move that will bolster its hopes of completing a £500m stock market listing later this year.
Sky News has learnt that Mr Spencer’s private investment vehicle, IPGL, is close to striking a deal that will see it acquiring up to a 5% stake in AJ Bell when it goes public.
The agreement, which would cost Mr Spencer about £25m, would be the first major investment he has made since sealing the blockbuster £3.9bn takeover of Nex Group, his electronic markets business, by CME Group.
The sale of Nex, which will secure the tycoon a payout worth about £670m when it completes in the autumn, cements his reputation as one of the most successful entrepreneurs of his generation.
Last weekend’s Sunday Times Rich List estimated his fortune at £884m, although this may have understated his windfall from the CME takeover of Nex.
IPGL has backed a number of other financial technology businesses, including Nutmeg, the digital wealth management service.
Mr Spencer is understood to have met Andy Bell, AJ Bell’s founder and chief executive, to agree a transaction which will guarantee that he acquires about 5% of the funds platform at the eventual listing price.
His involvement as a cornerstone investor will deliver a fillip to AJ Bell’s initial public offering, which is expected to include a special offer of shares to its more than 183,000 customers.
The float will see AJ Bell join the growing ranks of listed investment platforms, which include Hargreaves Lansdown and Transact.
AJ Bell, which oversees assets worth nearly £42bn, has hired Numis Securities, the stockbroker, to advise on the float.
When it goes public, it will turn Mr Bell into one of the City’s wealthiest entrepreneurs, as well as yielding windfalls for a number of top fund managers.
Mr Bell owns 28% of the company, which is expected to be worth several hundred million pounds after it floats.
Woodford Investment Management, the firm headed by prominent fund manager Neil Woodford, sold its stake earlier this year, while Invesco Perpetual is the biggest shareholder with 37%.
AJ Bell’s senior management team own most of the remaining shares.
Despite being privately owned, AJ Bell reports on its financial performance in similar detail to that which it will be obliged to provide when it floats.
This week, it said revenue in the six months to 31 March had increased by 16% to £42.9m, while pre-tax profit soared 24% to £13.9m.
The company has launched a broader range of services, including an investment management offering and a portfolio of passive funds, in a bid to exploit growing demand from retail investors.
It has also appointed new board members to prepare for a float by early 2019, including Laura Carstensen, the former deputy chairman of the Competition Commission.
Manchester-based AJ Bell does not provide personal investment advice to clients, but provides a platform for them to access a wide range of funds and execute their trading activity.
Presenting the half-year results this week, Mr Bell said they were “a great endorsement of our strategy and market position”.
“The UK retail investment and savings market continues to display strong growth and investment platforms are central to this.
“The need for people to provide financially for their future has never been greater and our focus is on making it easier for our customers to invest.”
Spokesmen for AJ Bell and IPGL both declined to comment on Mr Spencer’s prospective investment.