How will JTC (LON: JTC) benefit by acquiring CEES?

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How will JTC (LON: JTC) benefit by acquiring CEES?

 How will JTC (LON: JTC) benefit by acquiring CEES?

Summary

  • JTC Group Plc (LON: JTC) announced the acquisition of CEES, an employee benefits platform, from RBC Holdings, for £20 million in cash
  • CEES was incorporated in 2005 as an employee benefits platform

 

Wealth services provider JTC Group Plc (LON: JTC) has announced the acquisition of CEES, an employee benefits platform, from RBC Holdings for £20 million in cash. The company said the CEES is a highly complementary addition to the company that would add scale and quality to its corporate services division.

CEES was incorporated in 2005 with a wide range of international blue-chip corporate client base. The company offers a variety of employee benefit plans and product structures and excels in the management of many asset classes. It also provides services for administration and client support. CEES had generated a revenue of £23.5 million and incurred a consolidated loss before tax of £1.2 million in the fiscal year ending 31 October 2019.

JTC, which is listed on the FTSE 250 index of the London Stock Exchange, highlighted that CEES possessed a high-quality client book, which consisted of over 430 corporate relationships and more than 890 plans, along with nearly £11 billion worth of assets under administration.

(Image Source: ©Kalkine Group 2020)  

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On completion of the acquisition procedure, which is expected to be around the Q2 2021, JTC will merge 180 CEES employees including its senior management team into its JTC’s Institutional Client Services (ICS) division.

CEES employees serve international clients from its offices in Edinburgh, Guernsey, Jersey, and London.

JTC expects that over the time, there will be improvement in margins to reach current guidance levels of the group. The acquisition will immediately enhance the earnings and is forecasted to deliver more than 10 per cent of return on invested capital (ROIC) in the first year itself.

JTC added that the acquisition will boost its ongoing growth strategy. In future, it was hopeful to see opportunities rolling out for organic and inorganic growth of its divisions. The acquisition of CEES is the most recent in the list of successful bank carve-outs for JTC. Similar transactions with fund administration business of Kleinwort Benson and ‘international trust and wealth structuring business of Merrill Lynch’ had taken place in 2015 and 2017, respectively.

Nigel Le Quesne, the CEO of JTC Group, said that he wishes to achieve enhanced financial performance in the mid-term once CEES gets integrated onto the platform, and further see good organic growth opportunities in the medium and long-term.

Stock Performance

(Source: Refinitiv, Thomson Reuters)

The shares of JTC closed at GBX 554.00 on 10 December. The company has been delivering a positive YTD return of 30.24 per cent.

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