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Frenkel Topping puts itself up for sale

Frenkel Topping puts itself up for sale

Wealth management company Frenkel Topping has put itself up for sale to “enhance its competitive position”.

It follows the Lord Chancellor’s decision to slash the discount rate used to calculate compensation awards for serious personal injuries.

Frenkel Topping is a specialist provider of independent financial advice and wealth management to those in receipt of personal injury or clinical negligence claims.

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In a statement to the London Stock Exchange this morning (3 April), the company said the changes to the discount rate will increase the size of court damages “substantially” – predicting an average increase of 80 per cent.

The statement said: “These factors are expected to increase the market opportunity significantly and result in a material uplift in the rate of asset under management growth for Frenkel Topping.

“The board is of the opinion that the scale of the opportunity presenting itself is sufficiently large that in order for Frenkel Topping to capture it fully and make best use of its potential, it may require the group to combine with a larger, strategic partner.

“This would enable the group to take advantage of its competitive positioning more effectively and more quickly than it could be prudently expected to do on its own, and in doing so also generate potentially significant incremental synergies and maximise shareholder value.”

The company, which is listed on the Aim, has invited interested bidders to come forward during May 2017.

In February the Ministry of Justice announced it would cut the discount rate, which is used to establish lump sum compensation to claimants, from 2.5 per cent to -0.75 per cent.

The Association of British Insurers has labelled the change “crazy” and “reckless” and predicted that premiums for drivers and businesses across the UK would increase.

Last month Frenkel Topping said its pre-tax profits dipped during 2016 to £900,000 but it has said the launch of Frenkel Topping Investment Management last year, which runs a discretionary fund management and financial planning proposition, will deliver a “step change” in the company’s profitability.

damian.fantato@ft.com