Investec sells wealth unit to Brewin Dolphin for €44m

Company said Brexit and changes to its Irish business model had led to the decision to sell

Financial services firm Investec has sold its wealth management business to UK investment company Brewin Dolphin for €44 million.

The company, in a statement on Friday, said it had made the sale as a result of changes in its Irish business model brought about by Brexit planning and as part of consolidation taking place in wealth management.

It said net consideration for the transaction after adjusting for surplus capital was €44 million. The deal is expected to be completed in the second half of this year and is subject to regulatory approval.

Brewin Dolphin said the business would be expected to generate a pre-tax profit of about €4.5 million in the year to March 31st.

Job losses at Investec are possible. Brewin Dolphin said it would bring the company’s investment team of 33 on board, but they will be joined by “only the necessary support staff required”. There are currently 52 people employed in the wealth management business.

The wealth arm was acquired by Investec as part of its acquisition of NCB in 2012 and has grown significantly since then. Investec’s other domestic businesses are unaffected by the sale.

“To cater for the loss of banking passporting rights post Brexit, Investec has established its other financial activities in Ireland in a MIFID subsidiary, Investec Europe, which is authorised by the Central Bank,” Investec said.

“The Investec wealth management business in the Republic of Ireland is independent of other wealth management businesses in the Investec Group and hence its sale will not impact the wealth management offering in other jurisdictions.”

Brewin Dolphin chief executive David Nicol said the deal would allow it to “substantially” strengthen its presence in the Republic.

“This acquisition, which is consistent with our strategy of growth in assets under management, provides us with an exciting opportunity to strengthen substantially our existing presence in the Republic of Ireland, one of Europe’s fastest growing economies,” he said.

“We will also be in a stronger position to benefit from the country’s growing demand for discretionary and advice-led services, supported by favourable demographics, with the country having the youngest population in Europe.

“Our businesses are highly compatible in terms of culture, values, investment philosophy and client centric approach, which combined with our established platform, will enable us to meet more effectively the growing demand for wealth management services in both the UK and the Republic of Ireland.”

Investec was advised by Investec Ireland Corporate Finance in relation to the sale.

AIB were in talks last year to acquire Investec's Irish unit but the deal ultimately faltered. The bank had been selected recently as preferred bidder for Investec, but the talks hit a stumbling block as the period for exclusive discussions ran out.