Merrion eyes its rivals as it enters credit union sector

Acquisition of Le Chéile credit union adviser signals expansion drive into the sector

Merrion Capital has acquired Le Chéile Financial Services, an investment adviser to the credit union sector, and has signalled that it plans a major expansion drive into the sector.

The acquisition of one of the main independent investment advisers to credit unions should give Merrion a competitive foothold in an area where its rivals, such as Davy, have traditionally reigned.

Merrion, which bought the investment business for an undisclosed sum, said it plans to make a “substantial investment” in the Le Chéile business.

“We intend to become the leading provider of investment services to the credit union sector,” said Pat O’Neill, the Merrion group chief executive. He said Merrion’s investment products, such as bonds and structured products, are “ideally suited” to the credit union sector.

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Many credit unions were financially burned during the crash after buying highly leveraged, risky investment products in the Irish market.

Negotiating

Le Chéile works with about 200 of the country’s credit unions. The financial services business advises credit unions on how to negotiate better deals for its members with insurance companies.

It also provides investment advice to credit unions, offering them access to demand deposit accounts and fixed-income investments from BNP Paribas, Dexia, Standard Chartered and Investec banks.

John McCormack, Le Chéile’s investment manager, will join Merrion as part of the buyout.

“We will continue to adopt a conservative approach using high quality, investment grade institutions,” he insisted.

Diversify

“We will diversify across asset classes and this will allow credit unions to build portfolios, to manage risk appropriately and to offer the potential for better returns than short term cash deposits,” Mr McCormack said.

Most of Dublin’s main stockbroking firms, including Merrion, have beefed up their operations recently as they gear up to manage much of the extra cash in the economy.

Merrion recently hired a new head of corporate finance. It also hired high-profile investment specialist Pramit Ghose from Davy as its new global strategist.

Merrion also recruited a number of portfolio managers in recent months, including Jim McGoldrick, a senior manager, who also made the jump from Davy.

The group is now majority owned by its staff following a management buyout.

Its shareholders also include Tetrarch Capital, the property company and hotel owner, and Somers, a Bermuda-based financial holding company.

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column