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Lack of profit puts Aim off target for IFAs

Aim listing may no longer be an option for IFAs looking to capitalise their businesses, according to analysts.

Some analysts believe only very big IFAs with proven business models can now attract institutional investment while smaller firms will have to rely on mergers, acquisitions or provider investment to grow their businesses.

Institutional investors warn that the failure of Aim-listed IFAs such Inter-Alliance and Lighthouse to return a profit has dampened sector expectations at a time when providers are chasing distribution.

For the past two years, several IFA firms have been planning to float on Aim as a stepping stone to growth but analysts say the investing environment has fundamentally changed.

They argue that while the sector will see frantic activity as the rush for distribution plays out, institutional investors will not make plays for IFAs without clear profit potential.

However, product providers will be prepared to pay for strategic stakes in IFAs to secure distribution of their own products.

Bell Lawrie analyst Ian Macarthur says: “IFA businesses that floated in Aim are yet to prove profitable. A few smaller IFAs have tried floating, looking for fanciful valuations and have not got away with it. To succeed you need decent infrastructure in place and scale of numbers. Fund managers want to invest in a company because it is profitable in its own right, not for strategic reasons.”

HST Financial group chief executive Philip Lockyer says: “We have seen very few IPOs in any sector since September 11 but I do believe that we will see more mergers and acquisitions.”


Tempting clients back to Isas

With stockmarket returns less than exciting, investors appear to be playing it cool. But, Amanda Newman wonders, will this season&#39s Isas entice IFAs&#39 clients back? It would be unthinkable for Premiership football clubs to start the season early, leaving the likes of Manchester United and Arsenal still wearing their sarongs in faraway places. But individual […]

Davies staying on to finish off job at the FSA

IFAs believe that Howard Davies&#39 contract as chairman and chief executive of the FSA has been extended by 18 months because of his close personal involvement with ongoing reviews such as polarisation and Equitable Life.They say there are too many unresolved matters which Davies has linked himself to, including the regulator&#39s role in the Equitable […]

Product matters

Schroders has launched an offshore version of its medical discovery fund. In essence, this will be a mirror image of the onshore fund run by Kristine Bryan from New York.Healthcare remains a major long-term theme and has also become a political theme. Demographic trends strongly indicate that demand will grow at an exponential rate. On […]

Is the Isa freeze starting to thaw?

The 2002 Isa season is running out of time to produce any surprises. Industry sales figures for February and March are yet to be reported, but January was down by around 40 per cent on the previous year, with many pundits expecting February and March&#39s numbers to be similar.Hargreaves Lansdown investment manager Ben Yearsley says: […]

What are the key changes to transform pensions?

By Fiona Tait, pensions specialist In her final article for Royal London, Fiona Tait reviews key changes she believes have transformed, or will transform, pensions. In my 12 years with Royal London I have been paid to review, study and explain the numerous changes to pension legislation which have transformed our industry in that time. This is […]


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