Close Brothers says Olim buyer is a ‘better fit’


Close Brothers Asset Management chief executive Martin Andrew says it is selling Olim Asset Management because the UK equity manager does not fit with the firm’s core strategy.

“It’s always been run as a completely standalone business within the group,” Andrew told Fund Strategy.

“It is a specialist UK equity fund manager and their investment philosophy is different from the philosophy and process that we adopt in our core wealth management business. It wasn’t going to be possible to integrate that business into our core wealth business.

“It wasn’t possible for us to grow it because it’s such a different story to the core story we put out into the marketplace through our core business.”

Albion Ventures, the buyer of Olim, is a “better fit”, Andrew says.

The disposal of the business was announced in Close Brothers results for the year ended 31 July.

The disposal represents around £490m of managed assets, and contributed adjusted operating profits of £900,000 in the 2016 financial year.

In the asset management division, total adjusted operating profits were down 19 per cent to £14.4m, while managed assets ended the period at £8bn.

Andrew says the asset management division made a significant private equity gain in the last year’s results that wasn’t repeated in 2016 and that profits had taken a hit from the sale of its corporate business.

The corporate advice business had delivered £3.1m at the time of its disposal compared to £5.8m in 2015.

“Our underlying profits were broadly flat at £12.3m and in the light of depressed markets throughout much of the year that’s a pretty good result.”

Andrew says they continued to invest in the the business for the long-term with an expanded adviser population, hires in the business development team, the launch of Intelligent Retirement to help clients take advantage of the government’s pension reforms, and the acquisition of London wealth management firm Eos.

While flows remained positive in the lead up to and post the UK’s vote to leave the European Union, Andrew reckoned flows had improved further since the results period, which went to the end of July.

“It’s hard for us to know for sure how Brexit affected our business, but we do feel anecdotally, the closer we got to the referendum clients were hesitant about committing to markets.

“We think we can see business in August that in an ordinary year we would have done in late June or July,” Andrew says.

Andrew says because “99.9 per cent” of their business comes from the UK they are not impacted by the passporting issues that are currently concerning some of their peers.

The asset management arm is considering “small, high quality” business acquisitions, but he says there are no explicit options currently in the pipeline.