Rathbones confirms it’s in talks to acquire Speirs & Jeffery as Tilney owner Permira elbows in
Another asset manager merger is on the cards, as Rathbones today confirmed it is in talks to acquire Glaswegian firm Speirs & Jeffrey.
City PM understands that private equity firm Permira, which owns fund manager Tilney, is also sniffing around the firm. Permira has previously helped Tilney complete a number of acquisitions, from when it formed the business through the merger of Bestinvest and Tilney to the subsequent bolt-on of Towry.
Both Permira and Rathbones are valuing Speirs at around £200m, according to reports in the Telegraph. Shore Capital analyst Paul McGinnis was surprised by this price, noting it was a hefty premium to the firm's assets under management and profits.
"Any synergies would need to be at least double the current level of profitability to generate a return capable of value creation," he wrote in a note.
Speirs generated pre-tax profits of £9m in the year ending 10 May 2017 on revenues of £25.3m.
Rathbones last year walked away from a £600m purchase of Smith & Williamson, after it became clear that it would be hard for the deal to create value at the offered price. The cancellation came so late in the day that Rathbones lost £5m in expenses related to the deal.
Tilney had also waded into that deal, as it emerged the firm had made an all-cash offer which also fell through.
Mergers and acquisitions (M&A) in the asset and wealth management space have become increasingly common in recent years, as tightening regulation has forced firms to seek economies of scale.
A Moody's analyst today said that more M&A activity would be imminent following further transparency rules announced by the Financial Conduct Authority last week.