November 7, 2012 6:10 pm

Rathbones buys Taylor Young unit for £10m

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Rathbone Brothers has bought the private client business of Taylor Young Investment Management and said it aims to raise at least £24m to fund more acquisition opportunities arising from the volatile economic climate.

The £10m purchase will provide a 2 per cent boost to Rathbones’s funds under management, to £17.7bn, if all of TYIM’s funds are transferred to the wealth manager. Rathbones stressed that the acquisition was not dependent on new funding.

Andy Pomfret, Rathbones chief executive, said raising capital would give the company the flexibility to make more acquisitions in the private-client industry in the coming months and to support loans to clients.

“The market is perhaps more active than it has been for a few years. We think we’re in a pretty good position, therefore, to acquire some of these businesses as they become available,” he said.

Rathbones is seeking to raise at least £24.2m, or 4.3 per cent of its market capitalisation on Tuesday, by placing 2m new shares.

The fundraising initiative is partly driven by changes occurring in the private client investment market. Mr Pomfret said some regulatory changes were leading to more businesses being sold. There is subtle pressure from regulators to focus on core activities and the businesses Rathbones was likely to acquire may not be core to their current owners, he added.

The TYIM purchase will include an initial payment of £2.6m from Rathbones, who said the transaction is expected to be earnings neutral before amortisation in 2013 and then “earnings enhancing” in 2014.

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