Wealth manager St James’s Place said yesterday that majority shareholder Lloyds Banking Group had shelved plans to dispose of its stake, ending months of uncertainty that had affected its market value.
Lloyds owns 60% of St James’s, which has Scottish offices in Aberdeen, Edinburgh and Glasgow.
Speculation over a possible disposal by the bank was seen by analysts as holding back St James’s share performance but yesterday’s announcement, plus first-half results at the top end of expectations, sent the stock up 6.6% to 273.3p.
Analysts at JPMorgan Cazenove said the banking group’s change of heart had the effect of “removing an overhang” on the shares.
Welcoming the news, St James’s chief executive David Bellamy said: “We want to focus on the business rather than external things that are a bit of a distraction.”
The company posted a 60% jump in first-half operating earnings to £162.1million.
Pre-tax profits for the six months to June 30 came in at £87million, compared with £27.4million a year earlier.
St James’s said record second-quarter sales, up 46% year-on-year, also beat analyst forecasts.
New business on an annualised premium equivalent (APE) basis – a combination of regular and single premiums – rose by 44% over the six-month period, at £292.6million. Mr Bellamy said low returns on cash amid low interest rates plus higher tax rates for rich Britons boosted the business as clients sought more tax-efficient investments. Net inflow of funds under management rose by 50% year-on-year, cited by the firm as evidence investors were not in any rush to revert to cash.
Total funds under management stood at £22.4billion at the half year.
Another wealth manager, Rathbone Brothers, also hit the top of market estimates with a 17% jump in underlying pre-tax profits to £18.1million in the six months to June 30.
Rathbones also continued to attract new clients amid falling equity markets during the latter part of the period and net organic growth of funds – excluding the impact of markets – was 4%.
This represented a slight deceleration from 6% growth in 2009, which it attributed to clients taking money out of portfolios to supplement their income. Funds under management at Rathbones – which operates from 12 UK offices including branches in Aberdeen and Edinburgh – stood at £13.3billion, up 1.5% over the first half.