Alliance Trust Savings has bought Brewin Dolphin’s Stocktrade, adding more than £4.6bn in assets, in a bid to make ATS more profitable after a public battle with shareholders on the future of the business.
The company has bought Brewin’s execution-only stockbroking business for £14m, saying the deal gives ATS the ability to scale its operations, with access to 48,000 new potential customers and up to £4.6bn in assets under administration. Currently the Alliance Trust platform has £7.2bn in assets and around 57,000 customers.
Alliance Trust Savings currently breaks even, with this deal expected to boost the platform’s profitability in 2016, although integration costs may hit that bottom line.
Alliance Trust has come under fire from activist investor Elliott Advisors recently for many issues, among which are the loss-making businesses of ATS and Alliance Trust Investments. Shareholders had urged Alliance Trust to sell off the platform business.
However, Katherine Garrett-Cox, chief executive of Alliance Trust, made a deal with Elliott ahead of last month’s AGM, being given a year to turn the company around.
Stocktrade currently makes £9.64m in revenue, while ATS makes £12.83m.
“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,” says Patrick Mill, managing director at ATS.
“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,” says Garrett-Cox.
Funding for the transaction was provided by parent company Alliance Trust, and the deal is expected to completed by September this year.