Brewin Dolphin soars on results that increase takeover speculation

Oliver Gill
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Preview Day At The 2015 Chelsea Flower Show
Brewin Dolphin has sponsored a show garden at the Chelsea Flower Show for the past five years (Source: Getty)

Shares in wealth manager Brewin Dolphin jumped over ten per cent today despite a third quarter trading update that boss David Nicol downplayed as “steady progress”.

Total funds under management increased by 2.1 per cent compared to March 2016 to £33.5bn - exactly the same value that they were one year ago and in line with analysts expectations.

Meanwhile fee income was slightly ahead of same quarter in 2015, up one per cent at £71.3m although income for the last nine months was down on 2015 levels by 2.6 per cent.

Analysts explained the positive market sentiment by the fact that the results show the company is firmly on the road to recovery.

While growth is currently a struggle, we think the current Brewin management team has done much of the ‘heavy lifting’ in turning the business around from the weak situation they inherited just over three years ago,” said Paul McGinnis of Shore Capital Markets.

With a stable outlook McGinnis added that the firm, which has origins that date back to London stockbroking activities in 1762, could be a takeover target.

“The company is currently trading on an enterprise value of just 1.6% of total assets under management. Recent market transactions have taken place at substantial premiums to this level, and we think the company looks vulnerable at its current price,” said McGinnis.

However chief executive Nicol remained cautious in his statement to the market: "Our core discretionary business has continued to deliver organic funds flow and income growth, demonstrating its resilience in the face of uncertain market conditions. We remain committed to our growth initiatives and have made good progress during the quarter”.

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