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Cash-rich Walker Crips CEO Fitzgerald seeks acquisitions

by Annabelle Williams on Nov 28, 2012 at 00:01

Cash-rich Walker Crips CEO Fitzgerald seeks acquisitions

Walker Crips is considering bolt-on acquisitions after reporting record half-year pre-tax profits and substantially boosting the cash on its balance sheet.

Speaking to Wealth Manager, chief executive Rodney Fitzgerald said the company was looking at acquisitions, including different types of businesses that would complement its offering. 

‘We are being very careful about who we acquire, and for the right price,’ he said. ‘We are quite open to any financial services organisation that will add value. They could be bolt-on services as long as they add value and the value is clear.’

The firm has £7 million in cash on the balance sheet, after selling its fund management arm Walker Crips Asset Management – home to well-known managers Jan Luthman and Steve Bailey – to Liontrust earlier in the year. It also recently sold its unprofitable corporate finance division Keith Bayley Rogers, the results of which will appear on the group’s full year update.

‘We are now in a position of having cash, which will service us better through making an acquisition than earning a very low rate of interest in the bank,’ Fitzgerald explained.

While the firm has amassed cash on the balance sheet for the six months ended 30 September 2012, overall it posted an operating loss before exceptional items of £700,000, compared to a £800,000 profit in the same period last year. Fitzgerald attributed this to the unusually quiet markets this summer, which hampered income from broking.

‘Equity volumes are down in the market generally, and that meant a corresponding hit to our stockbroking commission income, which dented our overall performance to give us an operating loss,’ he said, adding that the business was bolstered by its structured product division and the York-based wealth management arm.

Despite the revenue fall in that division, Fitzgerald maintains stockbroking will remain part of the business ‘as it has done for nearly a century’ although he recognised it was pertinent to move towards a more fee-based business.

‘But given the retail distribution review, gathering of fees has a particular attraction, not only for regulatory reasons but also because it is perceived as better quality revenue.’

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1 comment so far. Why not have your say?

CoeurDeLion87

Nov 28, 2012 at 11:32

Goodness me. With yet another firm pledged on Wealth growth one wonders how far the consolidation can go. It has never been smart for City brokers to follow the crowd and yet this is what every stockbroker turncoat Wealth guru is doing right now. Converting businesses that have had a tradition in transactional expertise towards a fee doctrine smells to me of desperation with regulatory costs spiralling out of control alongside management pay. Sticking to what one knows usually pays dividends so one cannot help but feel that the strategy is being designed for the compliance pro-RDR brigade. Treating clients with contempt can only lead to casualties in a constricted economy where the market itself is suffering through low volumes that show no sign of improving. If I was a shareholder in WC which I'm not I'd question the logic of seeking bolt-ons right now ahead of RDR impact and park the cash.

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