Welcome to our new website! Let us know what you think..

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Nick Train backs Rathbones on sharp rerating conviction

1
Nick Train backs Rathbones on sharp rerating conviction

Citywire AA-rated manager Nick Train has congratulated Rathbone Brothers on striking such ‘an advantageous deal’ to acquire Jupiter’s private-client arm.

In April, Rathbones announced the purchase of £2.1 billion of assets from Jupiter and a further £0.7 billion from Tilney for up to a total of £57.4 million. Train (pictured) noted that this was equivalent to a price of less than 3% of funds under management.

‘Ostensibly this looks an attractive ratio because, before the deal was announced, Rathbones itself was being valued at circa 3.9% of its funds under management – implying the value of the funds acquired could double over time for Rathbones shareholders,’ said Train.

‘What’s more, we don’t think it too much of a stretch to argue that for a business of the calibre of Rathbones – a calibre strongly endorsed by the fact it was Rathbones that was able to close these deals at this price and not its rivals – that an appropriate rating for its funds under management might be closer to 5% of the total.’

As well as a share price rerating that would give it a market capitalisation in excess of £1.2 billion compared with today's £890 million, Train contended that Rathbones could equally continue to grow its funds under management further.

Last month’s deals took Rathbones to £24.8 billion of funds under management, a ‘praiseworthy achievement’ for Train but still 10 times smaller than another of his holdings, Schroders with £268 billion.

‘There is every reason to expect Rathbones to continue to grow, organically and by acquisition; its relative scale, credibility in consolidating complementary businesses and its nicely rising long-term share price all making it an attractive partner,’ Train added.

Over the past three years, Train's CF Lindsell Train UK Equity fund has returned 57.7% compared with an average of 32.5% from his peer group, according to Citywire data.

Leave a comment
Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Nick Train
Nick Train
12/155 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 56.61%
Citywire TV
Play Gervais Williams: the real reason to worry about Quindell

Gervais Williams: the real reason to worry about Quindell

Citywire AA-rated manager Gervais Williams has argued that sentiment is the true danger to Quindell.

Play AA-rated Lofthouse: 'maverick' tobacco settlements won't stop M&A

AA-rated Lofthouse: 'maverick' tobacco settlements won't stop M&A

Henderson International Income trust manager Ben Lofthouse shares his thoughts on recent developments in the tobacco sector in this video.

1 Play Renewable energy: what I found on my solar farm trip

Renewable energy: what I found on my solar farm trip

Renewable energy is attracting a lot of investor interest, so I headed to the UK's largest solar farm to find out more.

Your Business: Cover Star Club

Profile: Quilter Cheviot boss Baines sees more consolidation ahead

Profile: Quilter Cheviot boss Baines sees more consolidation ahead

Nineteen months on from the merger of Quilter Cheviot chief executive Martin Baines says the deal is now paying dividends.

Wealth Manager on Twitter