Allied Irish Banks has agreed to buy John Govett Group from Govett & Co for pounds 101m, making the bank the largest Irish fund manager.
AIB takes 75 per cent of the equity and will eventually concentrate all its existing fund management in the new company - John Govett Holdings. The management team at John Govett gets a 20 per cent stake and Govett Oriental Investment Trust will take the remaining 5 per cent.
While John Govett is well known for its unit and investment trusts, as well as operations in the Far East, its parent has been troubled by a series of law suits in the US. Yesterday, Govett renamed itself London Pacific Group, and said it was retaining its London quote despite doing most of its business in New York.
Analysts thought the price AIB paid for John Govett was cheap on a historic price earnings ratio of 10.7. The price also represented 3.4 per cent of the pounds 3bn in funds under management. This compares with 15.4 times and 4.2 per cent respectively for Commerzbank's acqusition this year of Jupiter Tyndall.
Analysts warned, however, that John Govett's margins could be eroded, thus hitting earnings. AIB's shares slipped 1p to 365p while Govett's put on 22p to 242p.Reuse content