Steady As She Goes As Rathbones Sells Trust Businesses

Stephen Harris

16 October 2008

London-listed discretionary fund manager Rathbone Brothers has announced operating income from continuing operations increased 0.7 per cent to £102.5 million in the nine months ended 30 September 2008 compared to £101.8 million in the comparable period in 2007.

Operating income from continuing operation fell 4.1 per cent to £32.4 million in the three months ended 30 September 2008 compared to £33.8 million in the comparable period in 2007.

Funds under management in Rathbone Investment Management were £9.9 billion as at 30 September 2008, down 5.7 per cent from £10.5 billion as at 30 June 2008. This compares with a 12.9 per cent fall in the FTSE 100 index and a 6.4 per cent decrease in the FTSE APCIMS Balanced index during the same period, says the company.

Unit trust funds under management have fallen 20 per cent from £1.5 billion at 30 June 2008 to £1.2 billion at 30 September 2008.

Cash held in client portfolios was £1.2 billion at 30 September 2008 compared to £0.9 billion as at 31 December 2007.

In a regulatory filing, the company notes the sale of the Jersey and Singapore trust businesses for total consideration of £29 million to Hawksford Holdings Limited, a company formed by the existing trust management team and Dunedin, the UK mid-market private equity house.

For the Jersey business, Rathbones has received an initial cash consideration of £23.5 million. In addition, there is deferred consideration of unsecured subordinated loan notes, with an initial issue value of £5 million; these will be repaid on the earlier of a future sale or listing of the trust business.

Rathbones will receive a further cash consideration of £0.5 million for the Singapore trust business.

Mark Powell, chairman of Rathbone Brothers said: “The turmoil in world stock markets created by the crisis of confidence in the banking sector has had an inevitable impact on our recent financial performance. It is however attracting further funds to Rathbones which is increasingly recognised as an independent provider of quality investment management and wealth management services. In the first nine months of this year, Rathbone Investment Management achieved a net organic inflow of funds under management of 7.1 per cent, Rathbones has a strong balance sheet with minimal borrowings and does not make use of the wholesale market to fund its operations.”