Brewin Dolphin said in a December 19 statement that it will pay £25.5 million in cash for Duncan Lawrie Asset Management, as well as an estimated £2.5 million for the business’s net assets. Brewin will use existing cash to pay for the acquisition.
The deal will see the transfer of 11 investment managers, eight investment support staff, £735 million of funds and around 1,000 client relationships. Completion of the deal will lift Brewin’s funds under management to £36.1 billion.
David Nicol, chief executive of Brewin Dolphin, said: “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.”
Duncan Lawrie Asset Management is part of Belgravia-based financial services group Duncan Lawrie.
The Bank of England’s decision on August 4 to cut its benchmark interest rate from 0.5% to 0.25% – the lowest level in the central bank’s 322-year history – played a part in Camellia’s decision to sell.
Camellia said in a statement that it had reviewed an earlier decision to invest further in the Duncan Lawrie businesses because lower interest rates in the UK had hit the outlook for private banking.
Malcolm Perkins, chairman of Camellia, said on August 25 that the Bank of England’s move to cut the interest rate to cushion the economy in the wake of the UK’s vote to leave the EU would have a “detrimental impact” on the company’s banking operations.
Justin Bates and Portia Patel, analysts at investment bank Liberum, said in a note that the deal will add scale to Brewin’s discretionary offering and boost earnings by 5% in the year ending September 2018.
Brewin said it expects Duncan Lawrie Asset Management’s to record annualised revenue of about £6.2 million in 2016, with annualised costs of £1.4 million, giving a pre-tax profit of £4.8 million. Ongoing costs are expected to be £1.1 million per annum.
Brewin Dolphin was advised by bankers at Rothschild on the deal. Buyside advisory boutique Fenchurch Advisory Partners advised Camellia.
The transaction, subject to certain regulatory approvals, is expected to close in the first half of 2017.