Sunday 20 October 2019

Goodbody may hive off capital markets

Stockbroking firm Goodbody is understood to be working on a structure for the sale of the business which would guarantee that its capital markets division is sold off separately over the next five years. Stock image
Stockbroking firm Goodbody is understood to be working on a structure for the sale of the business which would guarantee that its capital markets division is sold off separately over the next five years. Stock image
Samantha McCaughren

Samantha McCaughren

Stockbroking firm Goodbody is understood to be working on a structure for the sale of the business which would guarantee that its capital markets division is sold off separately over the next five years.

Irish Life, owned by Great Life Westco, would prefer not to buy the capital markets/investment banking division, according to market sources.

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A Chinese bidder is also unlikely to want the division, preferring instead to acquire the wealth management side of the firm. As first reported by the Irish Independent, the third interested party is Goodbody rival Davy.

Under one structure being considered, the current shareholders would hold onto a 20pc stake in the company with the transaction being fully completed when the capital markets business is bought by management or a third party.

Goodbody is 51pc owned by Fexco and 49pc owned by senior managers and staff.

Hiving off capital markets would ensure that Goodbody shareholders could extract full value for the division, although Fexco's preference is believed to be for a full exit. But allowing the buyer to hold back a portion of the proceeds would underpin any commitment given for an MBO or sale of capital markets.

The sale process is proving to be complex given the number of competing preferences among the shareholders.

While Fexco's focus is on a clean exit and a strong price, a significant numbers of Goodbody staff shareholders want to remain working in the business.

Some of these staff shareholders would prefer not to be acquired by Davy given there is deep seated historical rivalry between the firms.

Davy would be best placed to take on capital markets and it is understood that structures which would appeal to the other bidders are under consideration.

There is in excess of €50m in cash on the books following the sale of the Irish Stock Exchange, which was owned by Irish stockbroking firms.

Any buyer will also need to find a tax-efficient way to distribute the cash to Goodbody shareholders.

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