May 31, 2011 7:25 pm

Brewin Dolphin to acquire Tilman

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Brewin Dolphin is to acquire Dublin-based Tilman Asset Management to tap into the demand for private client investment management services in Ireland.

Jamie Matheson, executive chairman of the UK wealth manager, said he saw a “major growth opportunity” in Ireland in spite of the country’s economic troubles. In November Ireland had to seek an €85bn bail-out from the European Union and the International Monetary Fund.

“While Ireland has its difficulties, it will get over them and there is money in Ireland that needs to be looked after. Recent events in Ireland have only made this opportunity greater, with many clients moving [away] from banks and other institutions which were dominant in our field. The acquisition of Tilman offers a particularly good opportunity for Brewin Dolphin to address this demand,” he said.

About 10 per cent of Tilman’s assets are dependent on the Irish market.

Brewin Dolphin, subject to regulatory approval, will pay £18.3m in an all-share deal that is likely to close by the summer. An additional £13.2m will be payable in December 2014 based on Tilman’s performance until September of that year.

Tilman has £807m funds under management, of which 70 per cent is discretionary assets.

Brewin Dolphin, which has 41 offices throughout the UK and Channel Islands, has in recent months tried to convert more of its assets into discretionary funds. It manages the wealth of more than 130,000 private clients. Currently £15bn out of the £25bn of Brewin Dolphin’s assets under management are discretionary funds.

Last week Brewin Dolphin reported total revenues of £136m for the six months to March 27 this year, up from £120.9m in 2010, but announced a strategic review of its operations to reduce costs, partly because of the size of its office network.

Justin Bates, an analyst at Keefe, Bruyette & Woods, said: “We can’t help feeling slightly disappointed that this transaction does not appear to be earnings enhancing immediately. Brewin Dolphin values the Irish business at a similar multiple to itself, 11.5 times on a price-to-earnings basis. This implies the deal will be earnings neutral in the short term. However, with a fair wind there is scope for slight earnings enhancement in 2012, if Brewin Dolphin can increase the Irish business’s revenue yield.”

Shares in Brewin Dolphin closed up 0.5p at 168p.

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