Rathbones: how we plan to spend £24m cash pile

Rathbones is looking to power its next stage of growth through an opportunistic acquisition strategy, which targets firms that fit culturally but may be sub-scale, as well as looking to hire in new teams.

Finance director Paul Stockton (pictured) said the firm had raised £24.7 million in a share placing, representing 4.6% of its share capital, to fund a multi-faceted growth strategy. This will allow the firm to take advantage of acquisition opportunities in an industry that is now facing up to the full impact of rising regulatory pressures and costs. It will also look to hire in teams, while capitalising on growing its loan book.

The move follows its recent acquisition of boutique Taylor Young.

‘Most places in the wealth management industry are seeing an increased cost burden, more regulatory pressure, while equity markets are reasonably favourable at the moment to unlock deals,’ Stockton said.

‘All of this can combine to create opportunities for us. We are always looking and feel now is the right time. Rathbones is well placed to attract good teams and their clients and we will do acquisitions.

‘We think the environment is right and there was a good opportunity on the back of the Taylor Young acquisition to raise a small amount of money.’

‘As you would imagine, we are looking at all opportunities but importantly it has got to fit our culture, bring value to our shareholders and bring something to our core investment management business.’

Stockton added that the potential payment for the Taylor Young business – which could equate to around 3% of the firm’s £337 million in assets under management – represented a fair price.

The money raised in the share placing will also support anticipated growth in loans to clients. Rathbones currently offers loans to clients on an ad hoc basis and is now looking to more actively market the service to build the proposition.

Rathbones, which has a banking licence, currently has a loan book of £55 million, and is experiencing increased demand from clients for short maturity bridging loans.

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 followed by news it had acquired a 19.9% stake in Cornish-based financial planning firm Vision and its sister company Castle Investment Solutions.