Eagle Star, part of the Zurich Financial Services Group, has bought a stake in the electronic fund m...
Eagle Star, part of the Zurich Financial Services Group, has bought a stake in the electronic fund messaging system, EmxCo, raising its parent group's holding to 20%.
By looking at Companies House registration of shareholders, Investment Week discovered Eagle Star bought just under 14 million shares in EmxCo last month, equating to an investment of some £1.1m. This brings the total amount of new equity EmxCo has raised this calendar year to £10.7m.
Given that Threadneedle, also part of the Zurich Group, already owns a stake in the platform, the Eagle Star shareholding will be added to form an overall Zurich shareholding. Rosemary Callender, spokesperson for Eagle Star, said: 'As far as we see it, it is a Zurich investment that just happens to have been done through Eagle Star.'
Callender said the increased stake will not make Zurich the largest shareholder in the industry-wide messaging platform. Other shareholders include Fidelity, Skandia, Hargreaves Lansdown and Scottish Widows.
Phil Wise, chief executive officer of EmxCo, confirmed Eagle Star has bought a stake in excess of 7%, entitling it to a position on the EmxCo board. This will not be taken up, however, as the existing Threadneedle board slot will be used to provide a consolidated Zurich input into EmxCo, Wise said.
He welcomed the move but said the funding was not required to sustain Emx, whose future had already been secured through earlier rights issues.
Callender said the purchase was made as a strategic long-term investment by the group. She added: 'What plans we may or may not have for using Emx are not something we would want to talk about as we would regard it as commercially sensitive.'
As a life and pensions company, the rationale behind Eagle Star's investment is open to speculation. Wise said EmxCo has no interest in developing a system for pension and life funds. One theory is that the investment is a means of upping Threadneedle's stake in EmxCo while keeping it off Threadneedle's balance sheet.
Ongoing developments in Emx's functionality are to be outlined in a green paper due out later in the month, which will detail the platform's specification requirements to be able to carry out settlement and reconciliation.
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