Stonehaven, which becomes a wholly owned subsidiary, will retain its brand and continue to focus on the lifetime mortgage market, selling its products through financial intermediaries.
Jayne Almond, chairman of Stonehaven, said the capital secured by the move will help the company meet its aims.
She said: "This deal secures long-term funding which will allow us to develop more rapidly.
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"There is a growing consumer need for innovative and competitive solutions to solve the issues many people in later life face."
Chris Evans, group chief executive, MGM Advantage group, said: "The acquisition of Stonehaven provides a strong platform for us to develop and grow the retirement market.
"By sharing expertise and ideas across the group, we can leverage opportunities and help Stonehaven grow sales and become a significant provider of equity release."
The acquisition is subject to regulatory approval, with the deal expected to complete in Spring 2014. On completion, Jayne Almond will join the board of MGM Advantage group as a non-executive director.