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Inflow boost for River and Mercantile

New investment manager River & Mercantile has got off to a good start
September 4, 2014

River & Mercantile (RIV) only floated in June this year, having been formed by the merger of institutional adviser P-Solve and fund manager River and Mercantile Asset Management in March. These preliminary results only cover the six months to June, so there is no direct comparison with the previous numbers that covered the year to December 2013.

IC TIP: Hold at 208p

The combined entity serves primarily institutional pension schemes, with other clients comprising financial intermediaries and insurance companies. Despite the upheaval associated with the flotation - which incurred £4.1m of expenses - the group managed to attract a £722m net inflow of funds over the six months. Together with a positive investment performance of £219m, this helped boost client assets under management to £18.1bn.

Earlier this month the group launched a £5m Dynamic Asset Allocation fund, using both its asset allocation and equity management skills. More generally, R&M is seeking to break away from the more traditional pattern of offering clients a range of defined products by providing services based on client requirements. This so-called fiduciary management aims to achieve the asset owner's overall objectives, partly through the use of derivatives to hedge liability-related risks and equity exposure.

The group delivered cash profits of £14.7m. Analysts at broker Numis Securities expect this to rise to £16.5m in the year to next June, giving EPS of 15.8p.

RIVER & MERCANTILE (RIV)
ORD PRICE:208pMARKET VALUE:£171m
TOUCH:205-210p12-MONTH HIGH:234pLOW: 183p
DIVIDEND YIELD:1.1%PE RATIO:na
NET ASSET VALUE:78pNET CASH:£19.4m

Period to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013*30.67.817.0nil
2014†20.20.01-2.42.3
% change----

Ex-div: 9 Oct

Payment: 7 Nov

*Year to end-December 2013 †Six months to end-June 2014