Will the firm that helps in­vestors buy shares be a win­ning in­vest­ment it­self?

The Scottish Mail on Sunday - - Wealth - Joanne Hart OUR SHARES GURU WITH THE GOLDEN TOUCH

THIS week, Mi­das con­sid­ers two very dif­fer­ent stock mar­ket flota­tions, in­vest­ment firm AJ Bell and en­ergy ef­fi­cient in­come trust, SEEIT.

AJ BELL

THE av­er­age life ex­pectancy in the UK is just un­der 80 years for men and just over 80 for women. It has risen by about a decade in the past half a cen­tury and is likely to con­tinue in the same vein over the next 50 years.

As peo­ple age, they need to save more, par­tic­u­larly as gen­er­ous com­pany pen­sion schemes fall by the way­side. Many are choos­ing to do so us­ing in­vest­ment plat­forms, such as AJ Bell.

Co-founded by Andy Bell in 1995, the com­pany has al­most 200,000 cus­tomers, ad­min­is­ters £46bil­lion of in­vest­ments on their be­half and has de­liv­ered av­er­age an­nual growth of more than 25 per cent over the past six years.

Now the group in­tends to float on the Stock Ex­change at a price of be­tween £1.54 and £1.66 per share, valu­ing the en­tire busi­ness at up to £675 mil­lion. The dead­line for ap­pli­ca­tions is Tues­day and the flota­tion is pri­mar­ily aimed at large in­sti­tu­tions, al­though AJ Bell cus­tomers can also ap­ply – af­ter Bell him­self went against bankers’ ad­vice and said he wanted his clients to be el­i­gi­ble for the of­fer. Should they go for it? AJ Bell’s growth has been im­pres­sive. Fig­ures for the year to Septem­ber show cus­tomer num­bers up 20 per cent to 198,000, rev­enues up 19 per cent to £89.7mil­lion and prof­its up 31 per cent to £28.4mil­lion.

The group paid a gen­er­ous div­i­dend too and in­tends to main­tain that ap­proach af­ter flota­tion, pay­ing out two-thirds of post-tax prof­its to share­hold­ers ev­ery year.

As a busi­ness, AJ Bell dif­fers from many com­peti­tors in that cus­tomers can ei­ther ac­cess its in­vest­ment plat­form di­rectly – via AJ Bell Youin­vest – or through finan- cial ad­vis­ers – via AJ Bell In­vest­cen­tre. This dual ap­proach gives the busi­ness a broad spread of cus­tomers, in­clud­ing many rel­a­tively af­flu­ent in­di­vid­u­als, who use AJ Bell for Self-In­vested Per­sonal Pen­sions, Isas and low-cost share and bond deal­ing ac­counts.

The com­pany is also lower cost than many peers, not least be­cause most of the 750 em­ploy­ees are based in Man­ches­ter, where rents and salaries are con­sid­er­ably lower than in Lon­don and the South East.

Fol­low­ing the flota­tion, ev­ery em­ployee will be given 750 shares and the op­por­tu­nity to sub­scribe for up to £2,500 worth at the flota­tion price over the next year. The group al­ready has a strong, en­tre­pre­neur­ial cul­ture but this is likely to mo­ti­vate staff still fur­ther.

Bell him­self will be re­duc­ing his stake by just 3 per cent – from 28 to 25 per cent – and will be the largest share­holder fol­low­ing the flota­tion. En­cour­ag­ingly too, his par­ents are sub­scrib­ing for shares, along­side other friends and fam­ily.

AHEAD OF THE GAME: The fund plat­form AJ Bell spon­sors triathlon events

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