European Wealth is turning a corner following its ‘reverse’ takeover and listing last year, according to the group’s executive chairman John Morton, and is now working towards getting a “higher profile” to attract good acquisition prospects.
Speaking to FTAdviser, Mr Morton said the group had it had buyout targets in its sights and that it could find opportunities as a result of the “painful transition” to fees which he said could prompt a number of exit the industry.
While the RDR removed commissions on new business, existing trail was allowed to continue. However, a number of providers have already ceased paying legacy trail to save costs and much of what is left could end as a result of the sunset clause for platform legacy rebates next year.
“It’s a painful transition for some advisers and the same cost pressures are bearing down on the investment management side, which is also moving away from commission,” commented Mr Morton.
“This means there are good businesses out there, with similar values to ours, looking to sell at the right price.”
Mr Morton, European Wealth Management Group’s executive director, said that a solid basis had now been built, with 2014 results showing increases in both funds under management and full year revenue, as it almost halved the previous year’s pre-tax loss.
The group’s 2014’s results reveal pre-tax losses for 2014 of £203,000, 46 per cent less than the 2013 figure of £378,000. The wealth manager said the negative earnings continue to reflect “ongoing investment into the development of the business”.
Its results also showed that full-year revenue increased 16 per cent to £6.7m from 2013’s £5.8m. Funds under management also grew by 59 per cent to more than £1bn last year.
Operating profit fell from £1.6m to £300,000, but the figures were skewed by the ‘reverse’ takeover from EW Group last Spring.
Mr Morton stated that the firm has been in something of a “chicken and egg” situation, in that to attract good acquisition prospects, a higher profile is needed, but that is only achievable through boosting funds under management via acquisitions.
“By this stage we’ve been able to do most of the deals we really wanted to do and can now afford to be a bit more selective, although there are definitely some opportunities we’re looking at.”
Last week the listed wealth manager announced the acquisition of financial planning business Greensnow - which trades under the name ISM Solutions - for a maximum consideration of £3m, following a £2m fundraising push.
Mr Morton said this share offer would not all be spent at once, with both organic and inorganic growth plans on the table.
“We’re also looking to build out through bringing in talented individuals... that means both financial planning and investment front office staff in London, as well as making sure we have sufficient back office staff to support our growth properly.”
peter.walker@ft.com
