Some excitement in the world of small cap broking, with a bid approach for Evolution Securities.
Evo's shares have jumped 6.5p to 80p - valuing the investment banking and broking business at nearly £190m - after it said it had "received a preliminary expression of interest from a third party" which could lead to an offer.
Analysts said private equity or an overseas bidder could be behind the approach, with talk of possible French interest. Evo itself has been on the lookout for acquisitions as the struggling sector consolidates amid falling broking volumes and growing competition. A deal to buy rival Panmure Gordon fell through, but it is currently in talks about buying BNP Paribas Private Investment to boost its wealth management business. The latter could be the prime target for any bidder for Evolution itself.
Analyst Henry Biddle at Peel Hunt suggested any bidder would have to pay a premium his 86p a share target price to be successful. He said:
The group comprises two distinct businesses, Williams de Broe, a wealth management business which has shown good historic growth and is a recognised brand in the wealth management arena and the investment banking business which has produced varied results over recent years but is forecast to break even for this year. A strategic buyer may look to buy both and effectively split them up in order to benefit from the likely re-rating which would occur as Williams de Broe is valued equivalently to others in the wealth management sector.
