Covestone Asset Management acquired by Bank of Ireland

Bank of Ireland has acquired Dublin-based Covestone Asset Management for an undisclosed sum. The deal was signed four days before Christmas and is subject to approval from the Central Bank.

Covestone, which was founded by Donal Roche in 2008, has assets under management of close to €100 million, spread across about 150 investors.

Speaking to The Irish Times yesterday, Mr Roche said Covestone was at a point last year where it needed to invest up to €1 million to bolster its research and resources.

“We decided that rather than go the next stage ourselves, we would go with Bank of Ireland and develop the business that way,” he said. “They have a much larger research base than we would have had even if we had invested the money.”

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Mr Roche said a “good few” other parties expressed an interest in the company, but Covestone plumped for the bank, of which he has been a client for more than 40 years, because of its “similar investment philosophy and values”.

“We are happy to move our clients to them,” he said.

Kevin Quinn, director of investments at Bank of Ireland Private, said the acquisition was attractive for a number of reasons.

“Firstly, we liked the Covestone approach to money management. They share a lot of the same values in how we manage money. They have a conservative approach, are value-driven, and are quite focused on long-term preservation of value and intergenerational investment.

“Secondly, it’s a good bolt-on for us in terms of the range of funds that we have. We will have the capability to take on those funds and to continue the management of them in a consistent way to the management of them in the past.”

Mr Roche and the bank plan to meet Covestone’s clients next week to explain the rationale behind the deal.

Small profit

Latest accounts for Covestone show that it recorded a small profit of €1,757 in 2015 while its income rose by 9 per cent to €1.3 million. Mr Roche said its profit for 2016 would be €40,000-€80,000. Its three funds grew by 6.5-7 per cent in 2016.

The Roche family’s private equity and property investments do not form part of the Bank of Ireland deal. These are managed by Mr Roche’s two daughters.

He will work with the bank once the deal is cleared, marking a return to the sector, having previously chaired Barclays’ Irish subsidiary for nine years. Mr Roche is the son of one of CRH’s founders of the same name.

On whether this sale moves him closer to retirement, Mr Roche (63) said: “Between the sale of Covestone to Bank of Ireland and my two daughters taking over a lot of the family business, I have one foot in retirement, that is right.”

Bank of Ireland Private has close to €4billion in assets under management and enjoyed a strong year in 2016, according to Mr Quinn.

“We made a fair bit of money for people last year,” he said. “In spite of it being a bumpy year for markets we’ve had a good outcome for most investors, and we’re looking to build on that.”