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Execution-only business sold

Alliance Trust acquires Brewin’s Stocktrade in £14m deal

Katherine Garrett-Cox 3Alliance Trust Savings is acquiring Brewin Dolphin’s execution-only stockbroking business, Stocktrade for £14 million.

The deal will add more than 48,000 customers and £4.6 billion of assets into ATS across three main channels; direct customers, intermediary customers and strategic partnerships.

Divisional directors at Stocktrade, Graham Swan and Nicholas Pearson, will stay with the business in senior management roles. The existing Stocktrade team in Edinburgh will be transferring to Alliance, thus ensuring continuity of service for clients.

The deal is expected to move ATS from break-even profitability into meaningful profit in 2016.

It comes after Alliance Trust chief executive Katherine Garrett-Cox said in April that the trust would look to buy platforms to hit its £45bn asset target by 2020.

It also follows a truce reached between the trust and activist shareholder Elliot Advisors, after the latter raised concerns over the ongoing losses at ATS which it wanted the trust to sell.

ATS says the acquisition has the potential to significantly increase its assets from £7.2bn to more than £11.5bn and boost its customers from 57,000 to over 105,000. It will enable ATS to drive further economies of scale as both businesses offer similar products and services to a complementary customer base.

It also claims the increased scale and access to new customers, combined with attractive cost and revenue synergies, will strengthen ATS’s position in the rapidly expanding and increasingly competitive UK platforms market.

The partnerships channel consists of four main areas:

  • Pension providers: telephone and online share dealing services to their underlying SIPP clients
  • Building societies: offering both a telephone and online share-dealing service to their customers
  • Company share schemes: primarily relates to share-dealing and custody services for companies offering share dealing to employees, or to services provided to Share Plan administrators and their clients
  • Corporate ISAs: an ISA share-dealing service for employees of both US and UK companies

The parties are working together to ensure a smooth transition for all customers to the ATS platform.

Alliance Trust Savings will fund the acquisition price and additional associated regulatory capital of up to £8m in cash via an injection of equity from its parent, Alliance Trust.  Completion of the transaction is expected to take place towards the end of the third quarter of 2015.

Patrick Mill, managing director, ATS, said: We are really excited about this acquisition. It demonstrates ATS’ commitment to our ambitious growth strategy by extending our impact and adding value for the long term, with immediate effect. Our proposition, trusted brand, high levels of customer service and ability to respond to changing customer needs have enabled us to grow our business profitably. Already this year we’ve grown assets organically by 12% and this acquisition takes us to over £11.5bn in assets under administration.

“Stocktrade is a great strategic fit for ATS, giving us access to new customers, an increase in assets and the opportunity to build a strategic partnership capability. It also gives us the ability to align a traditional stockbroking business with our innovative, scalable and cost-effective approach by offering customers online access alongside our in-house customer service team. Our priority now is to focus on driving growth organically and profitably through the three channels, direct, intermediaries and strategic partnerships.”

Katherine Garrett-Cox (pictured), chief executive, Alliance Trust said: “Alliance Trust’s strategy is built on creating long-term and valuable relationships with our shareholders and customers. As set out in our vision 2020, our objective is to become the UK’s most trusted investment and savings business. Over the last couple of months we have received a lot of valuable feedback from our shareholders.  We are currently analysing that feedback and we will update shareholders further at our interim results in July.

Our strategy for ATS is to grow the business organically, but when appropriate acquisition opportunities present themselves that fit with our stringent criteria then these will be assessed. The acquisition by ATS of Stocktrade is an example of us putting this strategy into action and pursuing our ambitious growth targets.”

David Nicol, CEO of Brewin Dolphin commented: “The sale of Stocktrade is a good result for shareholders, customers and colleagues. It is consistent with our strategy of streamlining and simplifying our business and will further enhance shareholder value by allowing us to continue to focus on growing our core wealth management service.

“We believe Stocktrade customers and colleagues will benefit from being part of an organisation that will provide further investment and enhancement of Stocktrade’s service.”

 

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