St James’s Place eyes up Dublin boutique investor Harvest

St James's Place, the FTSE 100 investment group, has held discussions with Dublin-based boutique pensions and investment firm Harvest Financial Services as it weighs opportunities to expand into the Republic.

Harvest, which oversees about €1 billion on behalf of pension funds, private individuals, corporations and charities, had been in advanced talks to be acquired by investment company Cantor Fitzgerald Ireland in 2016, until they fell through last September.

It is understood that stockbrokers Davy and the Irish unit of South African finance house Investec had also looked at Harvest in recent years, with industry sources pointing to a value of as much as €10 million on the business.

After the talks with Cantor Fitzgerald folded, the owner-managers of Harvest, Gerry Devitt, Terry Devitt and Eugene Foley, subsequently carried out a strategic review of business as the industry grapples with rising regulatory and compliance costs.

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Sources have told The Irish Times that Harvest, which has about 50 employees in Ballsbridge in Dublin, has held exploratory discussions with St James's Place in recent months about a link-up, which could include anything from the appointment of the Irish firm as a local sales agent for its products to a partnership or acquisition.

Outright acquisition

However, an outright acquisition of Harvest is seen as unlikely in the near term, according to one source.

A spokesman for St James’s Place in Cirencester, Gloucestershire said the company “doesn’t comment on rumours or speculation”. Directors at Harvest didn’t respond to calls to their office seeking comment.

St James’s Place, which was established in 1991 by a coterie of City of London grandees and currently has £83 billion (€94.2 billion) of client funds under management, is understood to have been looking at the market in the Republic for some time. The company has a wealth management business in Belfast and a regulated life insurance business in Dublin servicing overseas clients.

The company joined the blue-chip FTSE 100 index in London 3½ years ago and currently has a market capitalisation of £5.95 billion. Lloyds Banking Group inherited a controlling 60 per cent stake in St James’s Place when it bought HBOS in 2009. The banking giant sold its remaining stake in the business on the stock market in December 2013.

Harvest, set up in 1993, services about 1,500 clients through the provision of retirement planning, financial planning and investment advice, according to the company’s website.

Administrative expenses

The latest set of accounts that Harvest filed with the Companies Registration Office shows that its profit after tax fell to €22,185 in 2015 from €149,790 for the previous year, amid an increase in administrative expenses as fees and commissions remained stable at about €4.25 million.

While investment firms across Europe have had to grapple with higher regulatory oversight and compliance costs in recent years, they now face an additional layer of regulation with new rules, known as the Markets in Financial Instruments Directive II, or MiFID II, set to take effect in January.

Industry sources say that this may ultimately lead to a long-awaited round of dealmaking in the sector in Ireland.