Houlihan Lokey Advises Flagstone Group Ltd. on Its Minority Sale to Estancia Capital Partners

Houlihan Lokey is pleased to announce that Flagstone Group Ltd. (Flagstone) has received a £108 million equity investment from Estancia Capital Partners. The transaction closed on 5 June 2024.

Co-founded by Andrew Thatcher and Simon Merchant, Flagstone launched in 2015 with a single ambition: to create a service-driven FinTech platform that helps U.K. savers make their money work harder. Today, Flagstone is the largest U.K. cash savings platform, based on the number of banks and savings accounts on its panel. Individual savers, small and medium-sized enterprises (SMEs), and charities using Flagstone—either directly or through multiple FinTech platforms, financial advisors, or brand partnerships—have the opportunity to gain access to more than 200 savings accounts from 60 of the U.K.’s leading cash savings providers, from the largest incumbent banks to the challengers.

Serving a customer base of more than 600,000, Flagstone’s total assets under administration (AUA) now stand at more than £11 billion. The company’s AUA increased by more than £1 billion per quarter in 2023 as more personal and business savers looked to maximise the interest earned on their cash and have the opportunity to benefit from the security of FSCS protection.

Flagstone recorded its first quarter of profitability in December 2022, and the company has maintained accelerating quarterly profitability ever since. Flagstone’s resilient growth strategy is underpinned not only by the management team’s significant investment in building partnerships and creating strong, scalable operations functions but also by providing seamless cash solutions to the U.K.’s undisrupted £1.7 trillion savings market.

Originally created as a platform for individual savers to access and maintain multiple cash savings accounts in one place, Flagstone today provides white-label and API-integrated capabilities for businesses to offer their own customers easy-to-use, adaptable, and competitive savings options. Flagstone partners with many of the U.K.’s leading wealth management firms, including St. James’s Place, powers a range of savings products at financial services providers, including Saga and Revolut, and through its international subsidiary, has already put in place a number of distribution relationships outside of the U.K.

The deal combines primary and secondary investments. The primary investment will be used to further consolidate Flagstone’s position in the cash deposit market, building greater brand awareness, doubling down on partnerships, and matching competitive savings products with premium customer service. The secondary investment will be used to reward Flagstone’s earliest backers, enabling them to realise a significant return on their investments.

Estancia Capital Partners is a U.S. financial services specialist private equity firm with deep expertise in the cash management market, having previously invested in two cash deposit businesses in the U.S.: PMA Network and Reich & Tang. The transaction marks Estancia’s first non-US investment since launching.

Houlihan Lokey served as the exclusive financial advisor to Flagstone. This transaction, which marks one of the largest equity investments in U.K. FinTech since the start of 2024, further strengthens Houlihan Lokey’s leadership in advising wealth and wealthtech businesses and adds to a host of previously announced transactions, including Perspective, Cinerius Financial Partners, Säkra, Saltus, Solomon, Ascot Lloyd, Cardale Asset Management, and Wren Sterling.

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