Alliance Trust is to bolster its savings arm with a £14 million bolt-on deal for Brewin Dolphin’s Stocktrade platform.
The Dundee-headquartered Trust said the proposed move – which will deliver up to £4.6 billion of assets under administration to Alliance Trust Savings (ATS) and 48,000 new customers – was expected to “transform” the subsidiary’s fortunes.
It said it would take ATS from a break-even situation currently to “meaningful profit” by next year, excepting integration costs.
Funding for the deal – including up to £8 million in additional cash to meet regulatory requirements – is coming from an equity injection from parent group Alliance Trust PLC.
The move is a significant step forward for ATS which, along with sister investment platform Alliance Trust Investments, has come under signficiant scrutiny in recent months as a result of investor Elliott Advisors’s activism over the last two months.
The hedge fund – which came to an eleventh hour peace deal with Alliance Trust ahead of its AGM last month – had prevously publicly stated it saw little value in the subsidiary businesses.
However, Trust chief executive Katherine Garrett-Cox told the AGM the two businesses remained key to the institution’s long-term strategy, and she outlined plans to grow them through both organic and inorganic means.
The Stocktrade acquisition, which is expected to complete in the third quarter of this year, is the first tangible evidence of the “inorganic” growth Ms Garrett-Cox hinted at.
The deal will increase ATS assets under administration from £7.2bn to around £11.8bn and take the company’s customer base through the 100,000 mark.
Patrick Mill, Managing Director, ATS, said: “We are really excited about this acquisition. It demonstrates ATS’ commitment to our ambitious growth strategy by extending our impact and adding value for the long term, with immediate effect. Our proposition, trusted brand, high levels of customer service and ability to respond to changing customer needs have enabled us to grow our business profitably. Already this year we’ve grown assets organically by 12% and this acquisition takes us to over £11.5bn in assets under administration.