Charles Stanley plans buy-out spree

Charles Stanley is in discussions with several acquisition targets to fill the gaps in its national network and strengthen its presence in key regions.

Michael Lilwall, director, said the firm planned to acquire new regional offices managing between £100 million to £300 million, alongside hiring staff and teams to strengthen its services in its core areas. The key gaps in the company’s national exposure Charles Stanley hopes to fill in the next three to six months include Cardiff, Glasgow, and Newcastle and northern England.

As company valuations tumble in the credit crunch, Charles Stanley finds itself with plenty of ammunition for its expansion plans. The firm’s cash position rose from £18.3 million to £32.1 million in the final three months of 2008.

While Lilwall declined to cite specific acquisitions, targets are thought to include London-based wealth manager Quilter – if Morgan Stanley, which found itself in control of the group for a second time after the merger between Citigroup and Morgan Stanley’s wealth division, decides to sell.

Lilwall said: ‘Organic growth is extremely important for us. We are fundamentally a people business, so we are looking for a good fit with our culture. We have low staff turnover and do not add people for the sake of it.’

In more consolidated regional centres, the company continues to look for additional corporate and client services and core client-facing staff.

Lilwall’s comments followed Charles Stanley’s interim management statement for the final quarter of 2008, which showed that overall revenue was 3% higher year-on-year at £27 million.

The increase failed to compensate for an earlier decline in brokerage fees during the first three quarters, with full-year revenue figures 3.4% lower than 2007 at £78.7 million.

Lilwall added that after a period of falling brokerage revenue in the first nine months of 2008, the last quarter had been ‘relatively busy’ as clients shifted their market exposure in the face of historically high volatility.

Overall assets under management fell 8.5% to £9.2 billion, with discretionary assets down 5% to £2.8 billion and advisory assets down 10% to £6.4 billion, broadly in line with their respective indices and with relatively low levels of redemption.