Brooks Macdonald is likely to have many strategic opportunities to buy IFAs following its recent acquisition, according to analyst Peel Hunt.
Earlier this week, Brooks Macdonald announced it would buy Warwickshire-based IFA Integrity Wealth, subject to regulatory approval.
The deal, which will see the IFA’s subsidiary Integrity Wealth Solutions also join, will add £250mn funds under management and 800 clients to Brooks Macdonald.
In an analyst note, Peel Hunt said although the acquisition of Integrity Wealth was "relatively small", it highlighted an interesting strategic opportunity for Brooks Macdonald to accumulate advice firms with which there was an existing relationship.
“This acquisition highlights the opportunity for Brooks Macdonald to offer an attractive option for IFA businesses to become part of a larger group –without the need to be fully consolidated,” it wrote.
“We believe there are a number of IFAs with significant levels of [assets under administration] that Brooks Macdonald has existing relationships with, to whom this model could appeal.”
Peel Hunt analysts Stuart Duncan and Robert Sage said Brooks Macdonald already manages around one third of the total £250mn that Integrity has under advice.
“There is some scope to increase this in the coming years, subject to ensuring that any change is in the best interests of the client,” they wrote.
The note also said Integrity should enhance and expand Brooks Macdonald’s existing financial advice offering, given the managing director of Integrity is to become head of advice for the group.
Brooks Macdonald’s chief executive Andrew Shepherd said: “An integral part of our proposition is to offer successful IFA partners like Integrity Wealth an opportunity to become part of a larger wealth management firm, adding both scale and capability, when the time is right for them.
“A shared culture and a focus on delivering a quality service provide a solid foundation from which to take advantage of exciting growth opportunities.”
sonia.rach@ft.com
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