CompaniesJan 12 2017

Rathbones eyes takeover opportunities

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Rathbones eyes takeover opportunities

Rathbones has revealed it is keeping an eye out for companies to buy, after posting a 17 per cent jump in funds under management last year.

The investment company saw funds under management climb to £34.bn at the end of December from the £29.2bn posted in the previous year.

Funds managed by unit trusts stood at £4bn last year, up 29 per cent from £3.1bn posted in 2015. 

In a trading update published today (12 January), the firm also said it has “retained an appetite” for acquisitions that fit with its culture, adding: “We look forward with cautious optimism.”

In 2015 Rathbones decided to purchase IFA network Vision Independent Financial Planning, but the chief executive of the company’s unit trust business Mike Webb later ruled out the possibility of another takeover of an advice firm. 

While it saw an uptick in funds under management, Rathbone Brothers also saw net inflows slow, totalling £125m in the final quarter of the year, down from the £165m posted in 2015.

Flows into its investment management arm slowed compared to the previous year as well, standing at £292m in the final three months of 2016 compared to the £368m posted over the same period in 2015. 

The firm stated: “Despite the market rally in the last quarter of 2016, political and economic uncertainty could particularly impact investment markets in 2017. 

“We expect to pursue planned growth initiatives in the coming year and continue to prioritise expenditure that enhances our client service and upgrades our infrastructure.”

Stuart Duncan, analyst at stockbroking firm Peel Hunt, said Rathbones has benefited from rising equity markets over the final quarter, saying assets under management were “comfortably ahead” of his expectations.

He also said the flows in the core investment management business were slightly higher that the £250m he had expected.

“Within the overall group figure, the unit trust business has also had a strong end to the year,” Mr Duncan said, adding the firm has an “excellent track record of growth”.

While rising markets have given Rathbones a boost, the analyst said 2016 was a transitional year for the firm, with short-term profitability impacted by investments such as its private client office.

Yet he added this expenditure will benefit the long-term growth prospects of the group, adding: “We retain our buy recommendation.”