Take the money now—you might not get a better offer.
That’s the advice of one analyst who thinks that a potential £3.1 billion buyout bid for wealth manager Quilter would be as good as it is going to get for investors.
U.S. private-equity firm Warburg Pincus has reportedly held discussions about a possible takeover of Quilter, according to a report in Bloomberg.
“We think shareholders should strongly consider accepting a bid around the current level,” said David McCann, analyst at Numis
in a research note.
He thinks Quilter
which only listed on the London Stock Exchange 18 months ago, is a “jack of all trades and master of none,” and claims the company lacks focus.
The stock, surged more than 12% on news of Warburg Pincus’ interest on Tuesday. The shares were trading 1.2% lower at 164 pence on Wednesday at 15:40 GMT and are now up more than 16% since its IPO in 2018.
Wealth management groups are set to be a hot takeover target this year as they struggle due to rising regulation and pressure on fees.
The sector has gone through a wave of mergers and is proving to be attractive to cash-rich private equity groups.
“We have seen a proliferation of smaller independent wealth managers, some of whom now feel burdened by rising compliance costs and the complexities of recent regulatory reforms and want to sell their practices to larger independents,” analysts at Bain & Co wrote in a report in November.
Tilney, backed by U.K. buyout firm Permira, snapped up rival Smith & Williamson for £625m in September, creating a combined group managing £45bn. Two months later, London-Listed wealth manager Brewin Dolphin struck a deal to buy Investec’s
Irish wealth arm for €44m. The deal followed Brewin’s £19 million acquisition of Bath-based Epoch Wealth Management.
Quilter has been in the sights of private equity before. Warburg Pincus and rival Cinven both showed interest in the business in 2016 before it was spun out of South African bank Old Mutual.
“Quilter would be a good candidate for private equity, rather than public market, ownership at the present time, given the extensive ongoing restructuring and platform transformation project,” said Numis’ McCann.
He said a price tag of £3.1bn would be equivalent to a 28% shareholder return since the company’s flotation.