Octopus Group has agreed a deal to acquire Seccl Technology for £10m ($12.1m, €10.8m), despite the cloud-based platform having just £10m in assets under administration (AUA).
Octopus said the acquisition, subject to regulatory approval, sets out to disrupt the platform technology market.
Bath-based Seccl was founded in 2017 to help financial advisers, wealth managers, discretionary fund managers and fintech companies build bespoke investment platforms.
In a blog post published after the announcement, Langcat founder Mark Polson described Seccl as an interesting business because it allows the adviser firm to be the platform operator, if they have the right permissions. “It’s then up to the adviser firm how much it charges its clients and so the potential is there for additional revenue streams.”
He added: “For firms who don’t want to or can’t become a platform operator, the vision for Seccl was that they could become effectively sub-tenants of the firms who have.”
But he highlighted the fact its AUA and valuation are equivalent after the deal at £10m. “It’s not about AUA at the moment – it’s about Octopus getting something pretty much ready to rock and roll in the platform space for a reasonable price.”
Octopus will provide continued investment as it grows the business.
Seccl is ‘disruptive’
CWC Research founder Clive Waller said Seccl is an “interesting outfit” and as a small cloud-based platform using new technology, it can operate at a much smaller level than traditional platforms.
“I certainly believe that they are disruptive. The problems with current platform propositions is that they try to do everything almost any IFA asks. This means they are huge in functionality (much unused), complex and expensive. Re-platforming problems prove that scale is of no use when linked to old technology.
“For me, the future will be small platforms, fundamentally doing custody, trading and settlement. Other functions will be performed by other providers linked via good APIs. Any part of the stack should be replaceable quickly and easily.”
‘Off-the-shelf’ solution
Seccl co-founder David Harvey said: “The platform technology space hasn’t changed in 10 years and, with a handful of firms now dominating the market, the time couldn’t be better for some new competition.”
The 13-strong team at Seccl, led by Harvey and chairman Hugo Thorman, will retain their base in Bath while also working from London.
Harvey will remain as co-head of Seccl, working alongside new co-head Sam Handfield-Jones, currently the director of growth and innovation at Octopus. Thorman will remain as a director working on strategy and customer relationships.
Once the deal completes, the platform will look to expand the Seccl team with new engineering, product and design staff, some of whom will move over from Octopus Wealth.
Waller added: “Octopus have been an innovative business and I see no reason why the acquisition shouldn’t work for them. In future, many distributors will consider running on their own technology, rather than give away margin that they can retain in the business.”
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