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Why Rathbone’s Jupiter wealth buy could be very special
by Dylan Lobo on Apr 01, 2014 at 11:23
The wealth firm, which also revealed the acquisition of Tilney's London team today, is funding the deals through a £24.4 million share placing.
The market reacted positively, with shares in Jupiter up 3.4% at 414.6p at 10.55am, while Rathbones was 1.76% higher at £18.46.
One of the questions raised is whether Jupiter’s asset management business will hemorrhage assets as a consequence of the sale. Around 30% the wealth arm’s £2.1 billion in assets are held in Jupiter funds.
Citi analysts Haley Tam and Abhijeet Sakhare are not concerned by this as they repeated their buy rating and 440p price target on Jupiter, which is led by chief executive Maarten Slendebroek (pictured).
‘The likely retention of these assets by Jupiter funds should be no different after the transaction as to now,’ the pair said in a note to clients. ‘Suitable Jupiter funds previously chosen for private clients should remain suitable after the deal.’
Core to Rathbones
Canaccord Genuity analysts Robin Savage and Arun Melmane were particularly appreciative on the impact the deal would have on Rathbones, prompting them to upgrade their rating from hold to buy with £19.50 price target.
The pair highlighted that on a pro forma basis the Jupiter and Tilney deals would increase Rathbone’s asset under management by 12.7% to £24.8 billion.
‘We expect these acquisitions to enhance Rathbone’s FY15e EPS by 3.8% to 130p,’ Savage and Melmane said.
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