Alchemy backs Seymour Pierce deal

The turnaround specialist has backed a management buyout of the investment banking division of the UK broker in a deal worth £7.35m.

Seymour Pierce has completed the first part of its two-part disposal strategy after UK turnaround specialist Alchemy Partners agreed to back senior management in the acquisition of the UK-based broker’s investment banking division.


Alchemy has joined forces with current Seymour Pierce chairman Keith Harris and Richard Feigen, the group’s head of investment banking, in a deal that values the business at £7.35m. It comprises payment for net assets of approximately £4.35m and goodwill of £3m. The loss before tax attributable to these assets in the year ended 30 September 2002 was £0.49m.


The investment banking unit comprises the corporate finance, corporate broking, institutional sales, research and trading and private client stockbroking businesses of Seymour Pierce Limited and Seymour Pierce Ellis. Under the terms of the transaction, the name Seymour Pierce and all rights to the trading name will be transferred.


Alchemy had originally approached Seymour Pierce in November 2002 about a bid for the entire group, although last month the UK broker confirmed that negotiations had narrowed to focus solely on the investment banking division. New Star Asset Management is thought to be in talks with Seymour Pierce to acquire its fund management division, which has £3bn under management, for around £20m.


Seymour Pierce is being advised on the ongoing sale process by ING Baring.


Alchemy has been an active buyer in the financial services industry during the past twelve months. In March 2002, the firm formed Alcentra, which specialises in managing pools of loans for institutional investors and in managing leveraged debt funds through collateralised loan obligation (CLO) structures. The unit was formed to acquire US-based Imperial Credit Asset Management from Imperial Credit Industries, a distressed US bank. In February, Alcentra acquired Barclays Capital Asset Management from Barclays in a transaction where the terms were not disclosed.


Private equity firms are increasingly being seen as potential acquirers of fund management companies as part of growing activity in the sector. Morley Fund Management, a unit of UK insurance firm Aviva, is one of a number of managers to have been approached by financial buyers, according to chief executive Keith Jones.


Last summer, Commerzbank, the owner of UK-based asset manager Jupiter, reportedly contacted a number of US buyout firms, including Texas Pacific and Kohlberg Kravis and Roberts, inviting them to look at the business. The German bank was said to be looking for around £400m for Jupiter and this target price, seen by many as high, was attributed the reason why no offer was forthcoming.