News

12
Jan

Acquisition looms for Rathbones as they seek to buy

Rathbones Investment Management  has revealed it is actively searching for companies to acquire, after boasting a 17 percent growth in funds under management last year.
Rathbones, who hold 15 offices across the Uk and Jersey, have witness their funds under management climb to £34 billion at the end of December 2016 proceeding the £29.2 billion posted in the previous year.
Funds managed by Rathbones’ unit trusts increased to £4 billion last year, increasing by an impressive 29 percent from the £3.1 billion posted in 2015. Rathbones have issued a statement detailing that they had “retained an appetite” for potential acquisitions that fit with it’s “culture”. They went on further to say, “We look forward with cautious optimism”. However, Rathbones have made it abundantly clear they would not acquire another IFA under its unit trusts. This was articulated by the chief executive of the company’s unit trust, Mike Webb, saying he had ruled out the possibility of taking over another advice firm in 2015.
Rathbones have displayed interest in IFA’s in the past, deciding to purchase IFA network Vision Independent Financial Planning in 2015, but had not bought the firm in favour of interest in non-IFA related business.
While the firm witnessed an increase in FUM, they had experienced a slow in net inflows, totalling £125m in the quarter ending last year, down from the £165m shown in the previous year in the same period.
Additionally, cash flow into the investment management arm of the business slowed comparatively, with last year standing at £292m in the last quarter of 2016, in parallel to the £368m seen in the previous year in the same period.
Commenting on this, the firm have stated, “Despite the market rally in the last quarter of 2016, political and economic uncertainty could particularly impact investment markets in 2017.
We expect to pursue planned growth initiatives in the coming year and continue to prioritise expenditure that enhances our client service and upgrades our infrastructure.”
Speculatively, these comments may be made in relation to Rathbones Investment Management no longer seeking acquisitions of IFA business, in favour of adding value to their existing services.
Market Analyst Stuart Duncan at Stockbroking firm Peel Hunt has said that Rathbones have benefitted from rising equity markets over the final quarter, saying assets under management were “comfortably ahead” of his expectations. Mr Duncan also stated the flows into Rathbones were “slightly higher” than the £250m expected.
“Within the overall group figure, the trust unit trust business has also had a strong end to the year”,
showing an, “excellent track record of growth”. Whilst external influences brought Rathbones a boost due to rising markets, the market analyst detailed that 2016 was a transitional year for the firm, whose short-term profitability was impacted by investments such as its private client office.
Long-term profitability growth prospects will be benefitted by these investments however, Mr Duncan has noted.