WH Ireland hopes to become the largest corporate broking firm on AIM and has a target of £5 billion in assets under management, chief executive Paul Compton has said.
Speaking to Wealth Manager in the wake of the company’s 2011 full year results – which showed a swing back to adjusted pre-tax profit of £2.2 million from a £4 million loss in 2008 – Compton said he had sought to move the business away from what have become ‘difficult’ areas for brokerage firms.
‘We are almost too small,’ he said. ‘I think we need to at least double the wealth management side to get to the scale where we can cope with all the compliance and all the regulation.’
The company currently manages £1.4 billion in private client assets.
The acquisition of the 8,000 strong client book from embattled stockbrokers Pritchard will go some way towards the goal for assets, and Compton said on the face of it, the deal looked like a bargain.
The acquisition saw WH Ireland's office count double with the group also planning to open an office in Lymington in Hampshire.
‘A couple of deals have recently gone through for 2% of funds under management. Pritchard has £400 million so you would have expected to pay £8 million and we paid £0.5 million,’ he said, adding he hoped to keep the bulk of the clients on board.
‘We are not going to lose half of them,’ he said. ‘I think if we can hang on to three-quarters of them – so £300 or £400 million – that would be great. You’d expect to pay £6 million for that and we paid £0.5 million. So whichever way you look at it, I think we paid a tenth of the price.’
Against the background of increasing regulation, Compton expects ‘half to three-quarters of small businesses in this industry will effectively go out of business fairly quickly’.
‘I think it’s going to be that big, because they just can’t cope with the regulation,’ he said. WH Ireland would be interested in acquisitions, although Compton said the increase of the firm’s cash balances to £7.4 million from last year’s £2.4 million was partly a safety net and not an acquisition war chest.