Peregrine swoops on acquisition
PEREGRINE is in advanced talks to acquire a wealth and independent financial advisory business and plans to take ownership of UK-based money manager Stenham.
FINANCIAL services company Peregrine is in advanced talks to acquire a wealth and independent financial advisory business and plans to take ownership of UK-based money manager Stenham over the next 24 months.
Peregrine is looking for a bolt-on acquisition to bolster its wealth manager Citadel. Stenham is strategic as Peregrine uses it to help clients in SA who want to expand offshore.
Peregrine group CEO Jonathan Hertz said the company had about R1.6bn in cash for acquisitions and had enough room to raise debt, as the firm was not geared.
“We quite like businesses in the Citadel space. There are some nice IFA (independent financial adviser) businesses and we can integrate them with Citadel. For us, these types of transactions are much more interesting,” Mr Hertz said after the company released its interim results yesterday.
“In fact, we are quite far advanced with some of these businesses,” he added.
Mr Hertz said Peregrine would look to buy a wealth and independent financial adviser business with assets under management of more than R5bn.
Citadel, the flagship wealthmanagement business at Peregrine, had assets under management of R36bn in the six months ended-September, with gross inflows of R1.7bn in the period under review. Peregrine said Citadel had a client-retention rate of more than 95%.
In the six months ended September, Citadel reported an 8% decline in headline earnings to R82m, hit by lower performance fees.
Citadel is Peregrine’s biggest earnings contributor.
Peregrine increased its stake in the UK- and Guernsey-based asset management and trust business Stenham to 84.9% from 80.9%. Mr Hertz said Peregrine was aiming for full ownership.
“We would be happy with 100%. I think we will get to 100% within the next 24 months.”
Asked how much it would cost at current valuations to take up the shareholding at Stenham to 100%, Mr Hertz said: “It would probably cost us somewhere in the region of £10m.”
Peregrine said yesterday its share of profit in Stenham had risen 111% to R44m.
The company added that Stenham’s total asset under management and advice amounted to $3.4bn compared to $3.2bn in March this year. It said Stenham had managed to increase its revenues thanks to a rise in assets under advisory.
Broking business Peregrine Securities reported a 56% rise in headline earnings to R51m in the six months ended-September.
In its local asset management business, comprising a number of fund management businesses and hedge fund manager Peregrine Capital, headline earnings fell 30% to R23m. The company said Peregrine Capital’s asset base had risen 23% to R5.9bn.
The advisory business Java Capital posted headline earnings of R12m, up 100% compared with R6m in the 2014 six months reporting period.
Peregrine had R33m in headline earnings from head office, taking total headline earnings for the company to R245.7m, a rise of 12% compared to R220m in 2014.
We would be happy with 100%. I think we will get to 100% within the next 24 months