Adviser flotation reflects changing industry

Perspective Financial’s intention to float highlights renewed interest in financial adviser firms seeking to raise capital.

The firm, which has more then £2.5bn in assets under management, hopes to raise £28m by listing on Aim. It is looking to grow its business through acquisitions, with 12 deals already in the pipeline.

However, some have expressed concern that investor appetite is not there for adviser firms amid a difficult profit-seeking environment post-RDR.

Article continues after advert

Lyndhurst Financial Management, which is listed on the Icap Securities & Derivatives Exchange, saw its pre-tax profit shrink by 20 per cent in the first three months of 2013, despite its income being higher.

Perspective has pointed to a strong post-RDR strategy to continue its growth, singling out an “enhanced service offering” and retirement planning as target areas.

“I think it is far enough away from the RDR now for everyone to be relaxed about the effects,” said Damian Keeling, managing director at the group, adding that the increased professionalism of the industry makes it more attractive to investors.

Listing on a stock exchange brings both benefits and responsibilities to companies. It opens up a route to financing, bringing a new source of capital to allow further development and acquisitions. However, directors become beholden to shareholders and must keep their interests in mind at all times.

An example of what can happen when a listed financial adviser runs into difficulties can be seen in the Lighthouse Group. The firm, which listed on Aim in 2002, sought to de-list in July last year but was blocked by shareholders wanting to retain their stake. Managers had claimed that appetite for adviser firms was low and it would be difficult to raise further money on Aim.

Mr Keeling said it is not the same situation for Perspective. “They are a network and we are a financial adviser,” he said. “It is just not the same business model.”

Of the top 15 financial adviser companies according to the 2012 rankings by MM sister title Financial Adviser, seven are listed on the stock exchange: Brewin Dolphin, Hargreaves Lansdown, Investec Wealth and Ivestment, St James’s Place, Charles Stanley, Close Brothers Asset Management and Skipton.

One of those currently not listed, Towry, has talked about its plans to list for several years, but has put plans on hold pending favourable market conditions.