Nucleus assets top £17bn as net inflows rise 102%

Nucleus Financial's Edinburgh HQ

Shares of Edinburgh funds platform Nucleus Financial Group rose about 3% on Friday after it published an update on fourth-quarter trading saying its assets under administration increased 7.2% on the previous quarter to £17.3 billion, with net inflows up 102% on the third quarter.

Nucleus Financial said on December 2 it has received separate proposals regarding possible offers to take over the company. 

The firm also said on Friday it has completed the acquisition of certain assets of Glasgow-based OpenWealth, which has provided business process outsourcing (BPO) services to Nucleus since 2011.

Nucleus Financial’s major shareholder is Sanlam Investments of South Africa.

“The company is pleased to report significantly improved net inflows, increased AUA and continued new firm momentum with the signing of a new enterprise relationship,” said Nucleus.

“As a result of this strong Q4 performance to date, both adjusted Ebitda for the year ending 31 December 2020 and year-end AUA are expected to exceed the board’s expectations …

“At close of business on 9 December 2020, AUA was £17.3bn, an increase of £1.16bn or 7.2%, since 30 September, comprising £997m of positive market movements and £166m of net inflows.

“Net inflows Q4 to date consisted of £388m of gross inflows and £222m of outflows, with both measures improving as late summer momentum accelerated …

“Outflows have reduced significantly over the year, reducing by 19.6% for the period from 1 October 2020 to 9 December 2020 compared to the same period in 2019 and by 23.4% for the year to 9 December 2020 compared to the same period in the prior year …

“The change of operating model as a consequence of the acquisition of the OpenWealth assets is expected to result in the cost base becoming increasingly fixed in nature, which is expected to accelerate margin expansion as AUA grows.

“An enterprise relationship has been formally agreed with a new adviser network …

“Nucleus IMX, the new model portfolio service has enjoyed a successful soft launch period and will start to be promoted across the wider audience from 1 January 2021.”

Nucleus founder and CEO David Ferguson said: “I am delighted that the acquisition of the relevant assets of OpenWealth has been completed.

“The acquisition is expected to be earnings enhancing in 2021 and increasingly accretive in future years.

“I very much welcome the OpenWealth team into the Nucleus group and look forward to working with them closely as we continue to grow the business.”

“We came into 2020 in great shape and as flows dipped through the height of the pandemic, we chose to maintain our focus and continue to invest in the things that make the greatest difference to our users, in the expectation that momentum would return as it has.

“The recovery in net inflows re-establishes the positive momentum from the start of the year and for the period 1 October to 9 December 2020 they are up 49.5% on the same period in 2019 and already more than double the net inflows for the whole of Q3 2020.”

“We will close the year having delivered several major product enhancements, completed the acquisition of the relevant OpenWealth assets, landed our first enterprise firm and started the roll out of our new model portfolio service, Nucleus IMX, all while maintaining operations and service levels through the crisis.”