The company announced the cash injection from Synova Capital this morning.
Synova has become the lead investor in Fairstone as a result and said there would be further cash available in future.
Fairstone has grown to encompass 260 financial advisers in the UK since it was founded in Newcastle in 2008. It said it has 25,000 private clients with £5.8bn of assets. The company reported it has current run-rate revenues in excess of £32m and aims to complete a sizeable number of acquisitions over the next 5 years.
David Hickey, chairman of Fairstone, said: “The combination of Fairstone and Synova is an exceptional fit on a number of fronts. From the outset it was apparent that Synova had been tracking the business for some time, understood the sector, and already had a high degree of knowledge of the Fairstone business model and its existing growth trajectory.
“This transaction introduces very substantial expansion capital into Fairstone and the Board foresee a sizeable shift in the scale of the group’s activities.”
Lee Hartley, chief executive of Fairstone, said: "Synova’s investment signifies an exciting gear change in Fairstone’s build plan and demonstrates our appetite to complete more and larger buy-out deals over the short to medium term.
“Our entire management team is obviously delighted to be working with Synova and this project has taken several months of careful planning. Synova has a proven track-record in investing into highly scaleable and technology leveraged businesses like Fairstone. This partnership with a leading mid-market PE house will allow us to accelerate our successful Downstream Buy Out acquisition model beyond our current forecasts.”
Alex Bowden, partner at Synova and newly appointed director of Fairstone, said: “Fairstone already has a strong standing within the sector and now has one of the largest Chartered financial planning firms in the UK within the group. We are delighted to be partnering with Fairstone as the business builds upon its highly successful acquisition programme."