IFG pays £12m for retirement advisory firm

Financial services group IFG has announced the acquisition of Berkeley Jacobs Financial Services, a Kent-based retirement advisory company, for up to £12 million sterling (€19.7 million). It also plans to raise €21.1 million through a placing and open offer to shareholders. The open offer will be on the basis of one new share at 162.5 cents per share, for every three shares held.

The whole issue has already been conditionally placed with institutional investors at 162.5 cents per share (the shares closed at 170 cents yesterday), subject to the clawback. "In order to enhance the institutional shareholder base", IFG said its directors, who hold 28.6 per cent of the equity, were not taking up their entitlement.

The deal, excluding the placing, will add 20 per cent to earnings, said chief executive Mr Richard Hayes. Earnings will be neutral with the placing. However, the proceeds from the placing will be used to expand the company at a faster pace.

The consideration consists of an initial payment of £6 million, £300,000 in cash, and the issue of a £5.7 million bank guaranteed loan. A further consideration of up to £6 million will be payable, provided profits achieve certain agreed thresholds in the four years to January 31st, 2004 - £5.1 million in loan notes and £900,000 in 911,226 IFG shares.

Berkeley Jacobs is a specialist independent adviser offering specialist pension and retirement advice to clients. Set up by founder directors Mr Paul Wheal, Mr Shaun Murphy and Mr Andrew Moore in 1992, it trades from freehold premises comprising 7,000 sq ft at Rochester in Kent. IFG will also acquire these premises from Berkeley Jacobs' pension scheme for an additional £400,000 cash.

Berkeley Jacobs has enjoyed substantial growth, according to figures supplied by IFG. These show a rise in sales to £3.1 million in 1999/2000 from £1.3 million in 1997/8 and a rise in pre-tax profit to £950,370 from £89,079 over the same period. Net assets amounted to £421,873 as at January 31st 2000, included cash of £678,112. The Kent company employs 35 people. Following completion of the deal, Mr Jonathan Fry and Mr Jonathan Pemberton, directors of IFG Life and Pensions, will join the Berkeley Jacobs board. IFG said as Berkeley Jacobs operated in just one sector "many of their clients require other services which can be provided by IFG".