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We see the UK platform market as representing an increasingly important segment of the wealth management market. High growth expectations for assets under administration and increasing corporate activity in the space underpin our interest for this segment.

We have seen a number of investment platforms complete IPOs since the start of the year, with debuts from Integrafin (better known as Transact) and Nucleus, and AJ Bell expected in the coming months; in addition to the well known longstanding consumer offering from Hargreaves Lansdown.

This sector plays an important role on two fronts: helping advisers to address an increasing regulatory/administrative burden and empowering individuals to manage their own wealth – as the responsibility for defined contribution pension scheme moves towards the employee.

Platforms benefit from assets flowing in from existing adviser and customers users, as well as newly established relationships. There are clear benefits from scale which we think will drive corporate activity: costs are predominantly fixed and capacity is not an issue.

There is already more than £600bn of pensions and savings wealth marshalled on investment platforms in the UK. Platforms bring transactional, client reporting and administrative functionality to both the adviser and client, as well providing essential tax wrappers such as ISAs and pension plans.

With strong recurring income characteristics from existing clients complemented by organic/structural growth in the space, valuations are rich by traditional standards with all currently listed players trading north of 20x forward PER, with Hargreaves Lansdown standing ahead of the pack at 29x cal’19 having proved itself over a long period and built a strong foundation.

Overall, we see an evolving space which will be increasingly active in the public markets, with interesting growth characteristics and a service offering in demand from both advisers and individuals.

A run down of the listed players, and the ones to watch:

Where are the risks?

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