Nick Train touts Rathbones / Saunderson deal as sign of ‘great consolidation opportunities’ in UK wealth space
Nick Train noted that Rathbones’ second quarter share price performance relative to its other wealth management games is “outstanding” and further evidence of “great opportunities for growth and consolidation” in the industry.
Writing in the June fact sheet for its Finsbury Growth & Income trust, Train noted that the performance of its wealth management holdings in the second quarter was mixed compared to other portfolio themes such as’ digital winners. ”And“ luxury brands ”.
Hargreaves Lansdown and Schroders, who are both in the trust’s top 10, underperformed, the former up 3% and the latter just 0.4%.
But its third position, Rathbones, has resisted that trend, with stocks rising nearly 6% in the three months ending in late June. During the period, the wealth manager announced that he would acquire Saunderson House for £ 150million.
Train said the difference in share price performance is “remarkable” as “it is increasingly evident that there are great opportunities for growth and consolidation in the UK wealth management industry”.
“Perhaps the reason Rathbones performed better in the share price during the quarter is because they were able to execute a trade on their own,” he said.
Train “interested” in Vanguard forecast for financial advisory boom
Train said he was “interested” in the comments done by Jon Keyborne, Head of the American Consulting Branch of Vanguard, at Financial Time this financial advice is “At the start of the innings” and demand will “explode” over the next decade as baby boomers retireEnnials face long-term savings challenges.
“While this is true for the United States, it also appears to be the case for the United KingdomTrain thought, noting that The acquisition of Nutmeg by JP Morgan “confirms that at least one world bank sees an opportunity to develop in the British wealth sector”.
He cited Schroders Personal Wealth, the joint venture between Schroders and Lloyds, as another example of companies capitalizing on this trend.
“The confirmation that Schroders has considered a merger with M&G is indicative of the consolidation options being considered by industry boards, ”he added.
See also: Nick Train sets Schroders apart as he targets a booming private wealth space
Saunderson deal “makes strategic sense” for Rathbones
Rathbones’ acquisition of Saunderson, which is expected to close in the third quarter, will see it become the UK’s third-largest wealth manager with £ 61bn in funds under management.
The deal will more than triple the number of its financial planners, add more than 2,000 clients with an average portfolio of £ 2.2million and bring its pro forma FUMA to £ 8.3 billion.
As the main shareholder of Rathbones, the Train shop Lindsell Train has raised £ 2.2million to finance the case.
Train said: “We welcome the combination, both because it makes strategic sense for Rathbones, but also because it is a reminder that when trades in this sector do occur they tend to do so at valuations. higher than those of comparable listed companies. Rathbones itself is valued at less than 2% of its assets under management, as is Schroders. “
See also: How is the acquisition of Saunderson House going by Rathbones?
FGT’s “digital winners” and “luxury brands” benefit from a rebound in the second quarter
Elsewhere, Train said after a difficult performance in the first quarter, Finsbury Growth & Income saw many of its quality growth stocks rebound in the second quarter.
Its ‘digital winners’ Sage, Experian and Daily Mail owner DMGT each saw their shares gain 12% in the quarter, while the London Stock Exchange and Relx also outperformed the market, jumping 15% and 7% respectively. .
The trust’s holdings in ‘high-end luxury and consumer brands’ made equally significant progress, with tonic maker Fevertree posting the biggest gains at 21%, followed by Diageo (16%), Heineken (13 %), Remy Cointreau (11%) and Burberry (9%).
Cadbury owner Mondelez rose 7% in the quarter, reaching an all-time high for the share.
In June, the net asset value (NAV) increased by 1.3%, while the stock price fell 1.4%, on a total return basis. In contrast, the FTSE All Share rose 0.2%.