LONDON BRIEFING: Royal Bank of Canada splashes out for Brewin Dolphin

(Alliance News) - Royal Bank of Canada has agreed to buy London-listed investment adviser Brewin Dolphin Holdings PLC for GBP1.6 billion.

The acquisition is an "exciting strategic opportunity" for RBC, it said Thursday, allowing the Toronto-based lender a chance to combine its UK and Channel Islands wealth management arm with the FTSE 250 constituent.

RBC will pay 515 pence per Brewin Dolphin share, a 62% premium to its 318p closing price on Wednesday. Brewin Dolphin shares closed down 1.4% on Wednesday.

They jumped 60% to 510.00p each in London in early trade on Thursday, giving the company a market capitalisation of GBP1.55 billion.

The RBC offer values Brewin's equity at GBP1.6 billion. RBC noted this represents 2.8% of Brewin Dolphin's GBP55.0 billion in assets under management as of February 28.

The tie-up of Brewin with RBC's existing UK wealth management offering will create a "market leader" with GBP64 billion assets under management, on a pro-forma basis, as well as combined annual revenue of GBP545 million.

RBC said: "RBC highly values Brewin Dolphin's position as a market leading advice focussed wealth manager in the UK and Ireland with a longstanding record of delivering superior client service. RBC is also attracted to Brewin Dolphin's position within the broader UK wealth sector as one of the foremost asset gatherers in a secular growth and consolidating market and its robust investment performance."

"The Brewin Dolphin directors, who have been so advised by Barclays and Lazard as to the financial terms of the acquisition, consider the terms of the acquisition to be fair and reasonable," Brewin Dolphin said.

In Toronto on Wednesday, RBC shares had ended down 0.4% at CAD139.88.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.1% at 7,589.32

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Hang Seng: down 0.5% at 22,124.46

Nikkei 225: closed down 0.7% at 27,821.43

S&P/ASX 200: closed down 0.2% at 7,499.60

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DJIA: closed down 65.38 points, or 0.2%, at 35,228.81

S&P 500: closed down 29.15 points, or 0.6%, at 4,602.45

Nasdaq Composite: closed down 177.36 points, or 1.2%, at 14,442.27

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EUR: up at USD1.1174 (USD1.1163)

GBP: down at USD1.3138 (USD1.3163)

USD: down at JPY121.48 (JPY121.94)

GOLD: down at USD1,928.01 per ounce (USD1,934.80)

OIL (Brent): down at USD107.66 a barrel (USD113.56)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Thursday's key economic events still to come

OPEC and non-OPEC ministerial meeting

0955 CEST Germany labour market statistics

1100 CEST EU unemployment

0730 EDT US challenger job-cut report

0830 EDT US initial jobless claims

1030 EDT US EIA weekly natural gas storage report

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The UK economy expanded at a faster pace than expected in the fourth quarter of 2021, data from the Office of National Statistics showed Thursday, despite the emergence of the Omicron variant. Gross domestic product expanded 1.3% quarter-on-quarter in the final three months of last year. The figure topped the previous estimate, which showed 1.0% growth. The revision means that the UK economy actually ended last year larger than it was two years earlier, before the emergence of Covid-19. In the third quarter, GDP had risen 1.3% on a quarterly basis. Annual GDP growth for the quarter was bumped up to 6.6% from 6.5%. In the third quarter, it had risen 6.9%. For the whole of 2021, GDP is estimated to have risen 7.4%, down from a previous 7.5% estimate. The ONS said this was due to a revised 9.3% decline in 2020, with previous figures showing a 9.4% fall.

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BROKER RATING CHANGES

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Jefferies cuts Hargreaves Lansdown to 'underperform' (hold) - target 820 (1,100) pence

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Jefferies initiates St James's Place with 'buy' - target 1,740 pence

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JPMorgan raises M&G to 'neutral' (underweight) - price target 250 (215) pence

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JPMorgan raises Phoenix Group to 'overweight' (neutral) - price target 800 pence

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COMPANIES - FTSE 250

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Subprime lender Provident Financial said its performance improved "significantly" in 2021. It swung to a pretax profit of GBP4.1 million from a GBP113.5 million loss. The figure includes the discontinued Consumer Credit Division, however. From continuing operations alone, Provident Financial recorded a pretax profit of GBP142.2 million, swinging from a GBP37.0 million loss in 2020. Revenue from continuing operations fell 13% to GBP534.6 million from GBP615.4 million. However, Provident's bottom line was boosted by an 84% reduction in impairments to GBP50.4 million. As a result of the improved profit figure, Provident declared a 12 pence dividend for 2021, having not declared one for 2020. The payout comes in the form of an interim dividend.

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Business-to-business financial information provider and events organiser Euromoney said it saw "strong revenue growth" in the second quarter which concluded on Thursday. "Fastmarkets and Financial & Professional Services underlying subscriptions revenue growth remains strong while the turnaround of Asset Management continues to progress ahead of plan," the company said. "In Events, we have seen a consistent improvement in booking trends since the beginning of 2022 resulting in a number of successful large events during the second quarter which achieved higher revenue than their pre-pandemic equivalent." Euromoney expects a full-year outturn in line with board expectations, without taking into identified cost savings from the real estate the company occupies. The company said it has "limited exposure to customers in Russia and Ukraine". "Combined revenue in FY 2021 was GBP1 million, or 0.3% of group revenue. The group can confirm that it has suspended business with individuals who are incorporated or resident in Russia or Belarus," Euromoney explained.

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COMPANIES - MAIN MARKET AND AIM

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Beauty brands firm Brand Architekts agreed to buy personal care products developer InnovaDerma. The deal will see InnovaDerma shareholders receive 7p in cash plus 0.3818 of a new Brand Architekts share for each share they own. Based on Brand's 106.5p closing price on Wednesday, the deal values InnovaDerma shares at 47.7p and its ordinary share capital at GBP13.6 million. "Brand Architekts has long admired InnovaDerma's reputation and experience as a direct to consumer beauty and skincare retailer. Brand Architekts and InnovaDerma have common cultures and shared values, with both companies focused on building sustainable brands with a digital first mindset," a joint statement read.

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Corporation Financiere Europeenne is on the verge of owning or receiving offer acceptances for just under 54% of AIM-listed CIP Merchant Capital. CFE's takeover offer for CIP Merchant Capital is expected to become unconditional on Thursday, as it had a 50% acceptance condition. Guernsey-based investment company CIP Merchant earlier in March labelled the bid as "hostile". It said the 60p per share offer, worth GBP33 million in total, was "similarly unattractive" to a previous 55p tilt.

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Thursday's shareholder meetings

Aukett Swanke Group PLC - AGM

BiVictriX Therapeutics PLC - AGM

CloudCoCo Group PLC - AGM

Pressure Technologies PLC - AGM

Red Rock Resources PLC - AGM

Toople PLC - AGM

Various Eateries PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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