Brewin Dolphin is to buy Duncan Lawrie Asset Management(DLAM)for around £28m,increasing the firm's funds under management to £36.1bn.
The deal will comprise a cash payment on completion of £25.5m and a payment to reflect the value of the net assets of the business at that date (estimated at £2.5m). It will be financed from Brewins' own cash resources, which stood at £171m at the end of the company's financial year (30 September 2016).
Completion of the acquisition is expected to take place during the first half of 2017, and is still subject to certain regulatory approvals.
DLAM has £735m in funds under management, around 1,000 clients and 19 staff. Approximately 84% of these funds are managed on a discretionary basis. As a result of the deal, total Brewin Dolphin funds under management will increase to £36.1bn.
As part of the acquisition, DLAM's investment team of 11 investment managers and 8 investment support staff are expected to join the London (17 employees) and Bristol (2 employees) offices of the group. The team will continue to be led by Seth Cowburn.
Based on performance in the nine months to September 2016, annualised revenues for the business are expected to be £6.2m, with employment costs of £1.4m. The annualised direct pre-tax profit related to the business is expected to be £4.8m.
Brewin Dolphin said its own costs as a result of the deal would be up to £1.1m per annum, while its non-recurring project and transaction costs would be £2m. The acquisition is expected to be enhancing to adjusted earnings per share from the financial year ending September 2017 onwards. Shares in Brewins were up 2.45% in early trading today, at 297.20p, following the announcement.
David Nicol (pictured), chief executive of Brewin Dolphin, said: "DLAM is a high-quality investment management business and the acquisition is an excellent fit for us given the shared business philosophy centred on a personalised approach to client service. The transaction demonstrates the attraction of Brewin Dolphin to wealth management professionals and clients who value traditional, personalised services coupled with an innovative, forward looking approach."
Seth Cowburn, head of wealth management at DLAM, said: "The investment management team at Duncan Lawrie Asset Management is excited to be joining Brewin Dolphin particularly given that its culture and investment style represent a natural home for DLAM. This was important in our decision making, and with the entire investment management team being welcomed by Brewin Dolphin, both continuity of service and the staff will remain unchanged.
"Brewin Dolphin's financial planning, research, infrastructure and investment management expertise will considerably enhance the service we can offer, and we see the sale to Brewin Dolphin as a very positive development for both the clients and the investment management team."
DLAM is the investment management subsidiary of Duncan Lawrie Private Banking, the private banking arm of Camellia Plc.
The chairman worries about finance getting in touch with its feelings
Cost of acquisition: £31m
Greg Camm temporary replacement
Plan ahead … do not rush
Adviser use of social media on the up