Rathbone Brothers has acquired Taylor Young Investment Management’s (TYIM) private client business and is looking to raise millions more through a placing of two million shares to fund further acquisitions.
TYIM funds under management were £337 million at 2 November 2012 and Rathbones expects to pay a total of up to £10million for the firm.
The deal will consist of an initial payment of £2.6 million, together with expected payments of deferred consideration in May 2013 and November 2014. Deferred consideration payments will be calculated by reference to the value of the funds that transfer to Rathbones on its 'standard terms' over the next eighteen months. The total purchase amount will be capped at £15 million.
The Taylor Young investment team, led by former Wealth Manager cover star Peter Thomson, will join Rathbones. The deal, which is not dependent on the placing, will increase Rathbones fund under management by 2% to £17.69 billion.
Rathbone aims to raise an additional £24.2 million through the placing to fund further buy opportunities in the changing face of the private client industry as regulatory and economic pressures mount. The money raised will also support anticipated growth in loans to clients.
‘We expect to see more acquisition opportunities in the private client industry in the next few years. Raising capital now will give us the flexibility to take advantage of these opportunities as they arise and help us provide more fully-secured loans to our clients, Rathbones chief executive Andy Pomfret (pictured) told the market.
'We welcome both the former clients of Taylor Young and their investment team to Rathbones. Like Rathbones, the team have a strong client-service based culture and I am sure that they and their clients will benefit from the stability and infrastructure that Rathbones will continue to provide.'
The move comes after a busy few weeks for Rathbones.
In October its investment management division struck a deal to grow its offshore presence with the acquisition of AIB Jersey. This was swiftly by news it had acquired a 19.9% stake in a Cornish-based financial planning firm.
The group has also hired Ex-Brewin duo Caroline O’Callaghan and Tony Milner to launch a branch in Lymington.
Shares in Rathbones had shot up 2.28% to £1,224p by 8.55am as the market welcomed the news. They are now trading 140p below their 52-week high.
Shore Capital analyst Owen Jones gave the move the thumbs up as he repeated his hold an 1,273p price target on the firm. 'The rhetoric surrounding appetite for further acquisitions does not come as a surprise, to our minds, as we had long been of the belief that should anyone in this sector look to complete acquisitions, that it would be Rathbones,' Jones said in a note to clients.
Peel Hunt analyst Stuart Duncan was more bullish, reiterating his buy rating and 1,445p price target.
Duncan said: 'Rathbones strengths remain its high operating margins and continued track record of new business growth, which are currently being supplemented by the acquisition opportunities available as the market continues to evolve in advance of RDR. We view the group as the quality play in the sector.'