Brewin Dolphin takeover does not signal strategy switch

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Brewin Dolphin takeover does not signal strategy switch

Brewin Dolphin bosses have said the purchase of Duncan Lawrie Asset Management does not signal a shift in its growth strategy.

Bosses stated the acquisition reflects the progress the group has made to turn around its business.

The discretionary fund manager announced yesterday (19 December) that it has struck a deal to buy Duncan Lawrie Asset Management for £28m.

But speaking to FTAdviser, Brewin’s finance director Andrew Westenberger said the firm is sticking to its growth strategy and is not looking for further merger and acquisition opportunities.

The more you look for these businesses the more you risk getting carried away and buying the wrong thing.Andrew Westenberger

Brewin Dolphin has paid for DLAM using some of the £171m capital surplus it had built up over the past three years, but Mr Westenberger said the group was not “deliberately hording” this cash to buy a firm, adding: “It was nice to have a bit of dry powder.”

“We shouldn’t necessarily expect to find many deals like this, and that certainly isn’t our intention.”

Mr Westenberger also said: “We are not beating our chest internally about this from an acquisition standpoint per se, and certainly this doesn’t mark a departure from our core strategy of growing organically.

“Good businesses will come to us; the more you look for these businesses the more you risk getting carried away and buying the wrong thing at the right price.”

“We are certainly not interested in following that sort of approach,” he said, adding however he would not completely rule out the possibility of further merger and acquisition opportunities.

The firm’s finance director said yesterday’s news underlines a “renewed confidence” and improvement in Brewin Dolphin since it refocused the business.

“We haven’t turned into a monochrome one-size-fits-all business that is obsessed with standardisation,” he said, adding he expects this personalised service to sustain the business long into the future, despite the increasing drive towards automation.

“Three years ago, however, I doubt we would have been in the running for this.”

Commenting on the acquisition, Stuart Duncan, analyst at Peel Hunt, said this move highlights a change at Brewin, from having been more internally focused to being able to take advantage of such opportunities when they are available.

Mr Westenberger said this was “absolutely right” because the company had previously been concentrating on the overhaul of its business, which included abandoning some parts of its service so it could focus on the core proposition. 

“That knocked our topline growth for a year or two because we stopped offering certain services, but now the fruits of all that hard work are coming through.”

Mr Westenberger also sought to reassure there will be no duplication in roles and no client overlap, adding: “DLAM’s team is very similar to the way we have our teams structured; it will fit very neatly alongside teams that look and feel very similar.”

Brewin will be migrating Duncan Lawrie’s client data over to its own system within the first year, and Mr Westenberger said this will be a “relatively modest” amount of work.

He also said Duncan Lawrie clients should be able to benefit from the broader range of services offered by Brewin, including its financial planning arm and passive model portfolios.

Peter Lenardos, analyst at RBC Capital Markets, said: “While not a step change, this is a step in the right direction and we believe that DLAM represents a sound acquisition for Brewin.” 

He said this transaction is an effective use of surplus capital and is aligned with management’s focus on discretionary management, while also being beneficial to the operational efficiency of the business going forward. 

Mr Lenardos also said the acquisition is “attractively priced” and a cost-effective way of building scale. 

Mr Westenberger added there would be no change in terms of costs to clients following the acquisition. 

katherine.denham@ft.com