Broker to pay €2.9m for Prescient

South African fund manager Prescient this morning updated shareholders about its disposal of its Irish business, Prescient Asset Management Holdings (Ireland), revealing the purchase price that Davy Stockbrokers will pay.

When the deal was announced last week the purchase price was not disclosed, but according to Prescient, Davy Stockbrokers will pay €2.9 million upfront for the old AIB Investment Managers business. It will also pay €125,000 for the cash held by Prescient, while the deal also includes deferred consideration based on the revenue earned from existing Prescient Ireland pension fund clients for the five years following completion.

For revenue earned from pension clients greater than £800,000 per annum and less than £1 million, the payment will be calculated on 50 per cent of revenue; for revenue greater than £1 million but less than £2.1 million a year, it will be 70 per cent of revenue; and for revenue greater than £2.1 million, it will be 80 per cent of revenue. The maximum payable by Davy will be the same as that which Prescient paid AIB in May 2012, and so total consideration will be capped at €6,223,921. Prescient will use the proceeds of the transaction to reduce interest bearing debt incurred when acquiring Prescient Ireland.

Prescient in Ireland is believed to have some € 2 billion under management, and should thus boost Davy’s managed assets by about a fifth. The deal marks Davy’s second acquisition in 18 months, following the integration of Bloxham’s asset management business last year.

The transaction requires the approval of the Central Bank.