Investec Group snaps up NCB for bargain-basement €32m
South African specialist bank positions itself strongly for eventual economic recovery with purchase of Irish stockbrokers
THE takeover activity in the stockbroking sector continued apace yesterday after South African firm Investec agreed to buy NCB Stockbrokers.
The Irish arm of Investec will pay €32.35m in cash for the broker that was set up in 1981 by financier Dermot Desmond and is now part-owned by the Quinn Group. The deal is expected to close during the second quarter subject to regulatory approval.
The Quinn Group, which has had a stake in NCB since 2003, will receive just over €8m as a result of its 25pc holding in the broker.
The remainder will go to 40 shareholders who all work for the broker. The fee is based on NCB's net asset value of €28m plus a 15pc premium for goodwill and the NCB brand.
No job cuts
There are no job cuts planned on the back of the deal. NCB's 120 staff will move into Investec's offices and, if all goes according to plan, the NCB name will eventually disappear. Investec has 112 staff in Ireland.
Investec Ireland chief executive Michael Cullen said he was "delighted" with the deal and added NCB would be an excellent strategic fit for his company.
"The NCB business will complement our successful capital markets business in Ireland, and is consistent with the group's overall objective to expand its fee-based and capital-light activities," he said.
Mr Cullen added that Investec was not doing the deal with a view to a quick profit, but was rather positioning itself for when the economic recovery here eventually happens.
"This deal works for both sides in that it improves Investec's name recognition in Ireland, and brings a strong Irish firm like NCB into an international group, and as a result, provides greater access to international markets.
"The transaction will provide a strengthened and diversified offering to both sets of our clients, bolstering Investec's capability to become one of Ireland's leading specialist banking groups," he added.
NCB chief executive Conor O'Kelly agreed, describing the deal as an "excellent" one for his clients and the firm.
"We believe that Investec's balance sheet strength and diversified product offering will resonate very well with existing and prospective clients," he added. This was not the first approach NCB had received in recent months. US giant Cantor FitzGerald reportedly made a move for NCB a year ago but ultimately did not pursue the business.
One of the stumbling blocks at that time is believed to have been uncertainty around the future of the Quinn Group's holding.
The deal is the latest in the stockbroking industry. Kerry-based Fexco paid €24m to AIB for Goodbody Stockbrokers in September 2010, while a management buyout of Davy Stockbrokers in 2006 netted then owner Bank of Ireland €316m.