Thursday 14 November 2019

Deal to sell Goodbody Stockbrokers to Bank of China for up to €150m agreed

Stockbroking firm Goodbody is set to be sold. Stock image
Stockbroking firm Goodbody is set to be sold. Stock image
Samantha McCaughren

Samantha McCaughren

The Bank of China is set to buy Goodbody Stockbrokers after emerging as the preferred bidder in a competitive process, it is understood.

The Chinese group has seen off Goodbody rival Davy and Irish Life ending a three-way race – despite being seen as the least likely winner just weeks ago.

Sources said that the Chinese group had beaten Davy on price, with the Chinese expected to pay up to €150m for Goodbody.

This is the second time that Goodbody, which is majority-owned by Brian McCarthy’s Kerry-based foreign exchange provider Fexco, has agreed a sale to a Chinese buyer.

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In January this year, the first sale was abandoned, following a move by the earlier would-be buyers led by Zhong Ze Culture Investments to alter its proposed shareholder structure.

Fexco and Goodbody management, led by Roy Barrett, opted to walk away.

The current process begun in late spring , with the Bank of China, Davy and Irish Life, owned by Great Life Westco, among those submitting first-round offers for Goodbody in May. Final round bids from all three were made in late August.

In recent weeks, it is understood that Goodbody had been seeking assurances from the Chinese buyers that a second deal with would not fall through.

While a Davy and Goodbody merger would have delivered significant synergies, there was concern among Goodbody staff, who own 49pc, of the company, that such a deal would have resulted in significant job losses.

There were also concerns of a culture clash given the deep-seated rivalry between the firms.

Davy had been confident that any competition issues could be ironed out. Davy was also seen the best bidder to take on the capital markets arm of the business which was seen as being of less interest to the Chinese and Irish Life.

However, it is understood that an agreement with the Chinese buyer was struck in recent days.

Goodbody is the country’s oldest stockbroking firm, with a 140-year history and deep roots in Irish corporate life.

It has 300 staff and is Ireland’s second-largest stockbroker.

Fexco initially bought a 75pc stake for €24m from AIB in the wake of the financial crash, when the bank was shedding assets at knock-down prices.

The firm’s management and staff later acquired around a quarter of the business, to raise their combined holding to 49pc.

A sale now allows Fexco to exit the firm entirely, having last year recouped €23m from Goodbody in a dividend out of the stockbroker’s proceeds of the sale of the Irish Stock Exchange. This is the latest wave of consolidation in Irish stockbroking.

US giant Cantor Fitzgerald has bought up the former Dolmen Stockbrokers and Merrion Capital as it has expanded here. And UK investment firm Brewin Dolphin has bought the Irish wealth management business of Investec in a deal worth €44m that closed this month.

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