Ifg Share Discussion Threads

[red5] 12/8/2019 07:31

so are these being taken over or not.

[red5] 10/8/2019 12:38

why is this gone up so suddenly when are their good numbers coming for this one.

[edwardt] 15/5/2019 08:33

well it strikes me that aj bell have made a mistake not bidding for this asset(s). it would be a great springboard for them but hey ho - private equity gets an asset on the cheap imo.

[edwardt] 03/5/2019 09:50

anyone know when this should be wrapped up or how long before a rival has to make a bid before completion?

[edwardt] 04/4/2019 08:49

saunderson house was put up for sale last year - james hay was not. the problem is that they kind of attract two different types of buyer. however, private equity always see things listed companies tend to miss. the long term cashflows of both businesses are very attractive indeed.

[sammu] 03/4/2019 10:48

The reference valuation to AJ Bell does certainly make it look cheap. I think it has been on the block for a while so any other suitor has had plenty of time/opportunity.

Lighthouse just been taken over by Quilter today too.

[edwardt] 03/4/2019 10:14

one wonders if another bid will come from the shadows - got to think someone is running the numbers. if i was a cfo of a large player, it would have my attention!

[edwardt] 25/3/2019 08:50

yes and no- by my reckoning they are getting a bit of a bargain. i would suspect saunderson house is worth at least £120 to £150m and if the aj bell float is anything to go by james hay should be worth £150m with ease.

[mick] 25/3/2019 07:57

Welcome news this morning!

[edwardt] 30/10/2018 16:39

i could have saved a lot of lawyer fees by saying the clue is in the title - self invested personal pension!

[edwardt] 30/10/2018 16:38

high court sipp ruling on suitability should be good for james hay.

[edwardt] 28/8/2018 11:48

with a rate hike priced at 90% chance in uk,this should help james hay a lot. priced in?

[edwardt] 20/7/2018 15:57

Market agrees with ennismore...

[edwardt] 10/7/2018 11:28

in other words 'buy'.

[edwardt] 10/7/2018 10:52

ennismore thesis = latest commentary ...

IFG is an Irish financial services company primarily operating in the UK, with a market capitalisation of GBP 142m. It has two subsidiaries – Saunderson House, a financial advisor with client assets of over GBP 5bn, and James Hay, an investment platform with assets under administration (AuA) of over GBP 25bn. Recent turmoil including legacy claims against James Hay and a poorly managed attempt to sell Saunderson House has led to substantial management change with the CEO, CFO and Chairman stepping down. We believe the accompanying negative sentiment towards the shares has resulted in a compelling value opportunity arising, even on very conservative financial assumptions.
Saunderson House occupies an attractive position in the financial planning market, focussing on wealthy clients where there is less competition between providers. Typical clients have over GBP 2.5m of assets and pay hourly for advice, limiting the negative implications from regulatory changes in recent years. Given the loyal client base with retention rates over 95%, the earnings stream is largely recurring in nature, as whilst one-off tax or regulatory changes can sometimes boost revenues, clients typically want advice annually. The number of clients and revenues have grown by over 11% and 15% p.a. respectively over the last four years. Operational leverage has seen underlying margins rise from around 22% to 26% and underlying profit of GBP 8.3m in 2017. Discretionary management was launched in 2015 and whilst in the investment stage, it is currently delivering strong revenue growth and offers good medium-term profit potential. Whilst profit growth in 2018 is likely to be hampered by the uncertainty created by the aborted sales process, overall, we view Saunderson House as a top- quality business, capable of growing profits by over 10% p.a.
The James Hay investment platform is predominantly used by financial advisors with a small proportion of direct business with consumers. It is particularly suited for assets in self-invested personal pensions (SIPPs), which form the vast majority of the platform’s AuA. The average client has a portfolio value of circa GBP 450k and customer churn is low at 7%, mainly due to death. Revenues come from annual fees based on either the portfolio value or a fixed amount, as well as some revenue from retaining a portion of interest earned on clients’ cash. Over the last five years the company has seen reasonable underlying growth, with AuA and the number of SIPPs increasing by 13% and 8% p.a. respectively. Profit trends however have been disappointing as fee pressure and lower interest rates meant operating profits were GBP 6.1m for 2017, versus over GBP 9m in 2012. From here we expect the trend to turn and the combination of cost reductions and higher interest rates to see profits rise above GBP 10m in 2018. With an outlook for stable fees and ongoing client wins, we expect the recurring nature of the fee income to be more apparent and sustainable margins to be over 20% versus 16% in 2017.
New management already know the businesses well. The CEO was previously on the board as a non-executive director and the Chairman was previously interim CFO, which we believe will be helpful in returning the company to a steady growth path. Recent share buying by the new executives and Chairman is also encouraging.
The company has GBP 4m of central costs covering both the board and central functions. We assume the central activities will be taken on by the divisions going forward, requiring additional costs of GBP 2m, which may prove to be overly conservative. The main legacy claim of up to GBP 20m against James Hay is for allowing an instrument (linked to an investment called Elysian Fuels) to be accepted into their SIPPs which has now been deemed unacceptable. In reality, apportioning the full blame for this to the platform, as opposed to other parties such as the advisor, seems unlikely. Nevertheless, we prudently adjust our enterprise value by GBP 15m for this. The platform no longer accepts non-standard assets and following a comprehensive review, the company is confident this will not recur.
Given the two distinct businesses, we think it is best to value IFG on a sum of the parts basis. We prudently value Saunderson House at 18 times profit after tax due its high quality, defensive, recurring profit stream. We value James Hay on a multiple of 14 times profit after tax as we see this as an annuity like profit stream with some growth expected. After adjusting for cash generation expected over the next two years, central costs, legacy costs and additional short-term incentives to ensure senior staff stability at Saunderson House, we get to a very conservative upside of over 35% by the end of next year.

[edwardt] 27/6/2018 08:29

nice to see decent buying by the management team.

[edwardt] 08/6/2018 16:12

not sure what ubs are up to..

[edwardt] 01/6/2018 11:57

nice to have ennismore properly onboard. they are pretty good...

[newbold120] 19/4/2018 21:26

Anyone wish to have been a fly on the wall at the last board meeting? Ed?

[newbold120] 03/4/2018 07:39

Interesting news.... hardly the strongest position to auction it. The team has clearly been a bit unsettled too...

[edwardt] 27/2/2018 08:36

integrafin listing values it at £650m with circa £30bn of aua for 150k clients. i think the americans would say 'go figure' when compared to implied valuation of james hay.

[edwardt] 22/2/2018 16:10

AJ BELL to float - why not just buy this instead and merge the two? Also list of wealth managers wanting SH should lead to a bun fight....

[newbold120] 13/2/2018 16:45

I wonder if they will actually sell SH or if it's to distract from the JH issues....also wonder if Curtis Banks has any similar exposures. From what I gather JH did not recommend Elysian and it's strange that the wrapper gets the blame. If I was the board I would challenge. Half the point of SIPPs was to put esoteric assets in - eg GPs putting in their surgery as property. Now I have heard that JH won't accept anything unless it is suitable for retail, which defeats the point somewhat...

[edwardt] 12/2/2018 10:36

i am not sure why we are limited to a sale of Saunderson. if that fetches £150m the value left for james hay is derisory. if i was aj bell, i would put in a bid for the lot.