WEALTH manager Brewin Dolphin raised a £40m war chest from investors yesterday to help spur growth, as it posted a big increase in adjusted half-year profits.
Brewin, which traces its history back to the nineteenth century, said the money raised from shareholders would be used to buy out rival teams in regional areas across the UK, capitalising on a broader trend towards consolidation in the wealth sector.
“There is considerable change in the private client investment management market, in part due to the current economic and regulatory climate,” David Nicol, Brewin chief executive said in a statement.
“Additional capital will enable us to take full advantage of the opportunities our leading market position presents,” he added.
Brewin is also set to use the cash raised yesterday – around £39.9m made from 19m shares placed at 210p – to bolster its solvency levels to at least 150 per cent and help it push on with a company efficiency review.
The group has undergone high level change in recent months, with a board shakeup seeing former executive chairman Jamie Matheson step down and Nicol being appointed as chief executive in March.
Brewin yesterday said adjusted profits, stripped out for redundancy costs, a regulatory levy, lease provision and amortisation of client relationships, increased 25.9 per cent to £23.8m.
Pre-tax profits including these costs fell to £6.9m from £12.3m. Funds under management increased to £28.1bn from £25.7bn a year ago.
Brewin yesterday also affirmed to shareholders its promise to improve operating margins, which are lower compared to others rivals in the sector. It said it plans to increase margins to 20 per cent by 2015 and 25 per cent by 2016.
Margins have hovered around the 15 per cent mark for many years, analysts said yesterday.
ADVISERS BREWIN DOLPHIN
Brewin lined up some of the best mid-cap broking names to help place the shares yesterday, recruiting Canaccord Genuity and RBC as joint book runners and Panmure Gordon as co-lead manager. Leading the transaction from Canaccord was managing director of corporate finance and broking Martin Green, pictured, who has worked on a number of other similar placings, including the £25m equity raise by wealth manager Rathbone Brothers in November 2012. Green joined Canaccord in 2011 from Bank of America Merrill Lynch.
He previously worked at Smith New Court and Cenkos and previously focused on financial services in sales before becoming an analyst. He has spent most of his career in corporate broking.
He also previously studied electrical engineering at Royal Navy Engineering College in Devon. Heading up the RBC Capital Markets team was Oliver Asplin Hearsey.
He is the former head of equity capital markets at Keefe, Bruyette & Woods, which he joined in 2010 after four years at Fox-Pitt where he took the helm of European equity capital markets products.
Prior to that he spent ten years at JP Morgan.