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Categorized | Financial, Insurance

Funds boost for St James’s Place

Posted on October 31, 2012

Shares in St James’s Place hit a five-year high after the life-assurer-cum-wealth-manager said well-heeled investors had entrusted more funds to it.

The group, in which Lloyds Banking Group holds a 57 per cent stake, said it now manages £32.8bn worth of client monies – an increase of 6 per cent in the past three months and 15 per cent since the start of the year.

    St James’s Place has more than 200,000 clients with at least £50,000 invested, and has found that they are increasingly seeking face-to-face advice to deal with “a growing tax burden, low interest rates and increasing life expectancy”.

    The FTSE 250 company said lower volatility in equity markets in recent months had boosted the confidence of retail investors, which helped it to attract £750m worth of net inflows in the third quarter. This took the total net inflow for the year to £2.26bn.

    David Bellamy, chief executive, also argued that St James’s Place was well placed to win business from rivals – particularly from retail banks.

    He said high-street banks were increasing the minimum level of funds required by individuals seeking financial advice. “High-street players . . . are looking to distance themselves from the middle market,” he said.

    By closing or cutting back on their advisory services, the banks were also making more financial advisers available for St James’s Place to recruit, he added.

    But analysts said the future of Lloyds’ stake in the business, which was originally bought by HBOS in 2000, remained a key consideration for investors. According to Barrie Cornes, analyst at Panmure Gordon, a part-disposal of the stake “cannot be too far off”.

    St James’s Place also disclosed on Wednesday that Bank of America Merrill Lynch had replaced Deutsche Bank as its joint corporate broker, working alongside JPMorgan Cazenove.

    Shares in St James’s Place rose 16.3p or 4.35 per cent to 396.2p – their highest level since the onset of the financial crisis in August 2007.

    FT Comment

    New business growth at St James’s Place has accelerated in recent weeks, and its business model looks relatively well placed to deal with regulatory changes in the sector in 2013. But much of this appears to be priced in. After outperforming the mid-cap index by almost 15 per cent in the past six months, the shares trade on more than 21 times full-year 2012 earnings of 18p – a large premium to the FTSE 350 life insurance sector on 11 times earnings, and to wealth management peers Brewin Dolphin on 13, and Rathbones on 17. That leaves little room for any slip ups.

    ● Andy Haste, former boss of RSA, has been named as Lloyd’s of London’s deputy chairman. He replaces Andreas Prindl, who is retiring.