St James’s Place has acquired discretionary investment firm Rowan Dartington for £34.2m, adding in excess of £1.1bn of funds under management to its books.
SJP’s half yearly report, published today (29 July), revealed that it has acquired 100 per cent of the Bristol-based firm’s share capital for an initial consideration of £19m, with a further maximum potential future consideration of £15.2m.
SJP acknowledged that the DFM space is “different” from the wealth manager’s traditional markets, however there are a “number of parallels” with client relationships managed by an investment executive and a focus on building long term relationships, albeit the DFM service is essentially investment-led rather than financial planning-led.
The wealth manager said the acquisition will provide its partners with the ability to meet a wider set of clients’ investment needs, including the management of existing portfolios and direct equity ownership.
The report added that the acquisition also opens opportunities to “meet the specific investment requirements of the growing trust and charity sector”.
Rowan Dartington is led by Graham Coxell and employs around 100 people, including 31 investment executives across 10 regional offices, with funds under management in excess of £1.1bn.
Prior to the acquisition, SJP entered into a new £250m “revolving credit facility”, repayable over five years with a variable interest rate, with a group of UK banks. It initially drew £125m under the facility to refinance existing bank facilities and to pay for the acquisition of Rowan Dartington.
The results also revealed that the wealth manager’s profits have been badly hit by the Financial Services Compensation Scheme levy. In the six months to the end of June, it posted profit before shareholder tax of £67m, a fall of 18 per cent compared to the first half of last year.
SJP said it expects its FSCS levy to be around £20m (£15.9m post-tax), a 189 per cent increase on last year’s £6.9m (£5.3m post tax), adding that “this significant expense impacts all profit measures”.
The report said: “We are naturally concerned about the scale of this year’s levy and the burden on shareholders and will be actively engaging in the FCA’s review of the allocation and application of the future levy.”
Despite this increased cost, the ‘underlying cash result’ for the first half of this year was up 8 per cent at £84.9m.
“By way of comparison, if we were to strip out the increase in the FSCS levy the underlying cash result would have been some 22 per cent higher,” the statement noted.
David Bellamy, SJP’s chief executive, commented: “Disappointingly, our profits have been impacted by the Financial Services Compensation Scheme levy, which has almost trebled from £6.9m to £20m.
“Despite this significant cost, the sustained growth and maturity of our funds under management continues to provide growth in the underlying post tax cash result and the board has declared a 20 per cent increase in the interim dividend to 10.72p per share.”
donia.o’loughlin@ft.com
