Expansion drives up costs at Redington

Ten pound note with Pensions written on it

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Redington’s growth drive has seen it pushed into the DC pensions sector

Administration costs rose 25% to £10.9 million in the 12 months to April 30 following the deals, according to Redington’s newly-filed accounts at Companies House. During the year, Redington made good on its pledge 12 months earlier to add extra staff in its “growth phase”, recruiting 20 professionals, taking its headcount to 88.

Recruitment fees rose 438% over the year as a result of the hiring spree.

Mitesh Sheth, Redington’s former strategy head who was promoted to chief executive in March, said: “We have adopted a target of making 100 million people financially secure over the next 10 years. To achieve this, we need to invest in our future.”

Over the year, Redington said in its accounts it had invested more than £2 million, or a quarter of its annual costs, into its business.

Sheth added he was prepared to draw on external funding to pull off acquisitions.

Redington’s turnover rose nearly 19% to £11.9 million over the year to April. The firm said its “normalised” earnings before interest, tax, depreciation and amortisation rose marginally to £2.01 million, after knocking off exceptional costs over and above normal running expenses. The costs would typically relate to new ventures.

Sheth said Redington would invest £1 million a pop in new ventures over a period of three years, after which it would review their future. One of its current ventures comprises an investment in a defined contribution business. Another is in the wealth sector, where Redington is advising St James’s Place on mandates worth £5 billion.

Redington entered a business relationship with consulting firm PwC in May 2015 and won some business from it. Sheth is evaluating its future. Redington said: “We are exploring how and whether to develop our working relationship to allow us to collaborate effectively.”

Elsewhere, a separation is taking place with online forum Mallowstreet which is now independently managed.

As well as new ventures, Redington is prepared to consider cross-border and technology opportunities plus online financial literacy projects, which could attract public sector funding.

Sheth said he would consider acquisitions, as long as it left Redington’s team in control of its destiny.

The firm’s co-founders, Dawid Konotey-Ahulu and Robert Gardner, have “expressed a desire” to dilute their dominant shareholdings to incentivise other employees, according to its Companies House statement.

Redington confirmed in the accounts that assets managed by all its clients rose 38% to £368 billion over the year. It retains plans to grow its number of pension clients from 66 to 100. Assets under consulting for Redington’s roster of retained clients doubled to £159 billion, with 78% of the firm’s revenues derived from them. Sheth stressed pension scheme advice would remain core to Redington.

Redington was voted New Growth Firm of the Last 20 Years by a Financial News judging panel in May 2016, while its RedSTART initiative, which seeks to boost the financial literacy of young people, won the Editor’s Choice Award at FN’s Pension Awards in June.

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