Monday 23 April 2018

Chinese close in on €150m deal for broker Goodbody

Major reshuffle as AIB enters exclusive due diligence on acquisition of Investec

Goodbody was offloaded by AIB at the peak of the financial crisis to the Kerry-based financial services group, Fexco for the paltry sum of €24m. Stock photo: Reuters
Goodbody was offloaded by AIB at the peak of the financial crisis to the Kerry-based financial services group, Fexco for the paltry sum of €24m. Stock photo: Reuters

Gretchen Friemann

Ireland's stockbroking sector is on the cusp of a major shake-up as Chinese investors edge closer to snaring Goodbody while State-backed AIB enters exclusive negotiations to acquire Investec for up to €70m.

The Irish Independent understands the looming €150m sale of Goodbody, which includes the broker's €45m stake in the Irish Stock Exchange, is in the final phase of discussions.

Legally binding contracts, known as a heads of agreement, are likely to be exchanged within three to four weeks.

The deal opens a radical new chapter for the local broker, which was offloaded by AIB at the peak of the financial crisis to the Kerry-based financial services group, Fexco for the paltry sum of €24m.

However Fexco has since sold down a portion of its initial 75pc holding to the firm's staff and executives, in line with an incentive agreement struck at the time of the takeover.

As this newspaper reported recently, boom-era developer Richard Barrett played a key role in the negotiations, fostering talks between the Chinese investors, who are backed by Chinese state funds, and the Dublin-based broker.

According to sources, the impetus behind the move stemmed from Goodbody's management rather than Fexco, which now stands to reap a hefty profit on its initial investment. Once the deal reaches the contract stage, the broker is expected to send a number of submissions to the Central Bank of Ireland about the impending ownership change.

Meanwhile, AIB looks set to clinch ownership of South African-owned Investec's Irish arm as it seeks to diversify into private wealth management and reassemble its corporate finance arm. According to sources, the part-nationalised lender is in exclusive due diligence for Investec's private wealth and Treasury operations. However the acquisition is likely to be struck at a far lower price than the Goodbody deal.

It is understood AIB will pay less than €100m for the targeted Investec segments.

Others predicted the price would fall between €50m to €70m. Yet while the deal marks a shift in AIB's strategy it comes at relatively little cost to the bank, which was stripped of its corporate finance division during the crash.

It is understood Colin Hunt, managing director of AIB's wholesale and institutional banking, has played a pivotal role in the negotiations and will spearhead the reconstruction of AIB's corporate finance arm as the bank seeks to diversify its income stream.

Irish Independent

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