Davy rivals secure about 10% of Bloxham funds

RIVALS OF stockbroking firm Davy are believed to have secured about 10 per cent of the €540 million in private client funds administered by Bloxham Stockbrokers that were due to transfer to the Dawson Street-based group as part of its takeover of elements of the failed broker.

This is expected to rise to about 15 per cent, and reflects the fact some senior Bloxham staff have chosen not to move to Davy and have taken their clients with them to other firms. Such transfers had been anticipated by Davy management. It is understood Goodbody Stockbrokers has secured a significant tranche of the money.

Sources last night indicated Goodbody had attracted about €40 million of Bloxham private client funds, with another €20 million expected to transfer by the end of this week.

Goodbody has been aggressively targeting Bloxham’s private clients and is expected to step this up in the coming days. Funds have also been switching to other brokers, including Dolmen, which has recruited a handful of Bloxham staff from the private clients division. The deal on private clients between Bloxham and Davy had been in train for some months.

Davy was approached by Bloxham late on Friday about also taking over its asset management business following the Central Bank’s direction to Bloxham to cease operations after it was told about accounting irregularities at the firm the previous evening.

Merrion Stockbrokers had approached Bloxham last month about the possibility of buying its asset management, institutional equities and bonds businesses after Bloxham sold the private clients division to Davy.

Discussions on a possible deal between Bloxham managing partner Pramit Ghose and his counterpart at Merrion John Conroy continued until the middle of last week, when Merrion was informed about the financial irregularities and ended the talks.

There was further contact between Bloxham and Merrion over the weekend about a deal to buy parts of the business. The regulator directed Bloxham to find the required regulatory capital of at least €5.8 million to maintain its stockbroking licence or to find a buyer for the business by the opening of business on Monday.

Talks continued between Bloxham and both Davy and Merrion over the weekend, while National Irish Bank, which is owed about €20 million by Bloxham and would be a beneficiary of a takeover, was consulted on the talks between the parties. While Merrion is believed to have been the preferred option of Bloxham partners, NIB was uncomfortable with the financial structure of the proposal from Merrion.

Merrion was unwilling to agree a deal as it did not want to write a cheque within the time constraints demanded for a transaction and without having completed due diligence.It is understood Merrion is currently negotiating with a number of Bloxham’s bonds team, which is not covered by the Davy deal, about moving to the firm.

Bloxham had been on the blocks for some time. Talks were held last October with Goodbody Stockbrokers, owned by Kerry-based financial group Fexco, which came to nothing. There are 25 Bloxham staff transferring to Davy – 13 from the asset management business and 12 from the private clients business. Some of the remaining 45 staff at Bloxham had already decided to leave, while the rest are being made redundant by the firm and have been given a month’s notice.

Corporate financier Tony Mulderry advised Bloxham during its negotiations, while Des Carville of Davy Corporate Finance advised his firm in the transaction.