Alliance Trust Savings buys Brewin Dolphin stockbroker in £14m deal

Alliance Trust Savings (ATS) has announced today that it has entered into an agreement to acquire Brewin Dolphin’s execution-only stockbroking business, Stocktrade for £14 million.

Dundee-based ATS said the move has the potential to add more than 48,000 new customers and £4.6 billion of new assets across its three main channels of direct customers, intermediary customers and strategic partnerships.

ATS said the deal is expected to transform its current break-even profitability into “meaningful profit” in 2016, prior to integration costs.

A statement from ATS said: “The acquisition of Stocktrade has the potential to significantly increase ATS’ assets from £7.2bn to over £11.5bn and ATS’ customers from 57,000 to over 105,000.

“This will enable ATS to drive further economies of scale as both businesses offer similar products and services to a complementary customer base.

“The increased scale and access to new customers, combined with attractive cost and revenue synergies, will strengthen ATS’s position in the rapidly expanding and increasingly competitive UK platforms market. In addition to the platform business, Stocktrade also brings a strategic partnership channel with established relationships and existing management capability, enabling ATS to expand its distribution capability.

As part of the transaction the divisional directors responsible for Stocktrade, Graham Swan and Nicholas Pearson, will stay with the business in senior management roles.

The existing Stocktrade team in Edinburgh will be transferring across to ATS upon completion.

Patrick Mill, managing director, ATS, said: “Already this year we’ve grown assets organically by 12% and this acquisition takes us to over £11.5bn in assets under administration.

“Stocktrade is a great strategic fit for ATS, giving us access to new customers, an increase in assets and the opportunity to build a strategic partnership capability. It also gives us the ability to align a traditional stockbroking business with our innovative, scalable and cost-effective approach by offering customers online access alongside our in-house customer service team. Our priority now is to focus on driving growth organically and profitably through the three channels, direct, intermediaries and strategic partnerships.”

Katherine Garrett-Cox, chief executive, Alliance Trust said: “Over the last couple of months we have received a lot of valuable feedback from our shareholders. We are currently analysing that feedback and we will update shareholders further at our interim results in July.

“Our strategy for ATS is to grow the business organically, but when appropriate acquisition opportunities present themselves that fit with our stringent criteria then these will be assessed. The acquisition by ATS of Stocktrade is an example of us putting this strategy into action and pursuing our ambitious growth targets.”

David Nicol, CEO of Brewin Dolphin added: “The sale of Stocktrade is a good result for shareholders, customers and colleagues. It is consistent with our strategy of streamlining and simplifying our business and will further enhance shareholder value by allowing us to continue to focus on growing our core wealth management service.

“We believe Stocktrade customers and colleagues will benefit from being part of an organisation that will provide further investment and enhancement of Stocktrade’s service.”

ATS will fund the acquisition price and additional associated regulatory capital of up to £8m in cash via an injection of equity from its parent, Alliance Trust PLC.

Completion of the transaction is expected to take place towards the end of the third quarter of 2015.