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AJ Bell IPO: A potential bright spot in asset management industry gloom

28/11/2018 · Brewin Dolphin (BRW)  · St James's Place (STJ) 

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Money in British pounds - AJ Bell IPO investment
Don’t look to the UK’s wealth managers for any sense of clarity regarding the current state of the markets. We’re receiving very mixed signals. On the one hand, St James’s Place and Rathbones have been punished by a market nervous about the outcome of Brexit negotiations, but Brewin Dolphin has managed to report record assets under management in the financial year to September 2018 and AJ Bell has said it is seeking a market capitalisation on IPO at the upper end of analyst’s forecasts.

The good:

AJ Bell IPO – The asset manager is seeking a market capitalisation of between £626m and £675m as it prepares its Initial Public Offering (IPO). The company will join the stock market on 12 December, five days after it sets the final price (which will be based on investor demand). Analysts hadn’t expected the group to set such a high price target for its shares (between 154p and 166p) and had previously been forecasting a market capitalisation nearer to £500m.

But, according to the Financial Times, AJ Bell has almost doubled assets under management over the past three years and has just under 200,000 customers. In its most recent financial year to the end of September the company grew pre-tax profits by 31%, to £28.4m and increased revenue by almost 20%.

Its projected market capitalisation (should investors agree to the price being offered) gives a price to earnings value far lower than its larger rival Hargreaves Lansdown, which dominates…

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