Brewin Dolphin (BRW) has bought Investec’s wealth management business in Ireland for around €44m (£38m), less than a month after the group confirmed it was in exclusive talks to acquire the business.
The deal, which emerged out of a competitive auction, adds some 5,000 client relationships and €4.6bn-worth of assets under management to Brewin’s stable. Supportive demographics (Ireland’s young population) and rising demand for discretionary and advice-led services (as in the UK) were cited as two reasons for optimism, and help to explain the division’s revenue growth of 20 per cent in each of the last two financial years.
On a pro-forma basis, this would have added €4.5m in pre-tax profits for the 12 months to March. But looking ahead, the boost to earnings will be softened by a £60m placing at 305p a share to fund the purchase and boost regulatory capital following a string of recent bolt-on deals. Larger shareholders have been “broadly very supportive”, according to chief executive David Nicol.
To enable those investors to get an up-to-date view of what they’re backing, Brewin brought forward the release of a mediocre set of half-year results, which showed a slower £0.8bn of discretionary net inflows during a wobbly period for wealth managers.
Canaccord Genuity, which is reviewing its forecasts, but currently expects adjusted pre-tax profits of £70m and earnings of 19.7p a share in the year to September 2019, falling to £64.7m and 18.2p in FY2020.
| BREWIN DOLPHIN (BRW) | ||||
| ORD PRICE: | 309.4p | MARKET VALUE: | £ 877m | |
| TOUCH: | 309-309.4p | 12-MONTH HIGH: | 392p | LOW: 287p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 91.2p* | NET CASH: | £139m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 161 | 34.1 | 9.7 | 4.4 |
| 2019 | 160 | 29.7 | 8.3 | 4.4 |
| % change | -0.2 | -13 | -14 | - |
| Ex-div: | 23 May | |||
| Payment: | 14 Jun | |||
| *Includes intangible assets of £88m, or 31p per share. | ||||
