Bottom Line: Orthodox moves at St James's

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The Independent Online
ST JAMES'S Place Capital wants to be seen as a proper financial services group, not just a large pool of money that trails along behind Lord Rothschild's enthusiasms. It is to return about pounds 135m of assets to its shareholders.

Haven't we been here before? A decade ago, an earlier version of St James's Place pioneered the concept of the financial services supermarket, until it fell apart when BAT Industries snatched Hambro Life out of Jacob Rothschild's grasp and he changed tack.

Sir Mark Weinberg, Hambro's founder, is again at the centre of the company's plans, both as joint chairman of St James's Place and as chairman of J Rothschild Assurance, the life office start-up that is the biggest of its financial businesses. The others are three fund managers and J Rothschild Wolfensohn, the investment banking joint venture set up with James D Wolfensohn last year.

However, these businesses make up only about a quarter of the pounds 198m with which St James's Place will be left after its reconstruction.

The company is to give its shareholders the 37.6 per cent stake that it owns in RIT Capital Partners, the Rothschild investment trust that includes a stake in Newmont Mining in its eclectic portfolio.

The distribution of RIT shares at its formation five years ago was limited because of tax considerations. Clive Gibson, a St James's Place director, said it was now possible to distribute the rest of the shares without the company incurring a tax penalty.

But RIT's performance in the intervening years will produce a capital gain for most shareholders. To head off objections, St James's Place is also paying out pounds 32.7m of cash which, Mr Gibson said, will more than cover the tax liability in 99.9 per cent of cases. So shareholders will receive 0.9895 RIT shares and 48p in cash for every four shares they hold.

As it becomes a 'normal' company, St James's Place intends to pursue a consistent dividend policy. But since its net assets are shrinking by more than a third, so will its dividend.

The group remains a long way from becoming an orthodox financial services group. It has about pounds 150m of liquid investments that it can use to finance the growth of JRA and the rest, or, more likely, take advantage of new opportunities. St James's Place claims it backs established management teams, that it needs to understand the sectors where it invests, and that it is risk- averse (it is wary of merchant banking).

None the less, on past performance this description looks likely to leave it as a follower of Lord Rothschild's wandering star. As this has often proved a profitable policy in the past, few shareholders will object.

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