Euromoney has announced a strategic review of its Asset Management business. This division accounted for 39% of FY18 revenues and 44% of FY18 operating profit before central costs. It has been under structural and cyclical pressure as its clients (primarily sell-side providers) have struggled with the dual impacts of MiFID II and the growth of passive asset management. A sale is not necessarily the only outcome of the review and, if that is the route chosen, management has a record of strong discipline in M&A pricing. A disposal would naturally result in the growing Price Reporting segment being a greater proportion of the continuing business. The valuation implications depend on how the proceeds were reinvested.
The brands of BCA, Ned Davis Research and Institutional Investor are well established and recognised within their markets and management has already taken action to improve their profitability (see July update). Group strategy is predicated on recycling capital to improve the quality of the assets and drive higher revenue growth. Some of this is self-help; some is M&A driven. The review will seek to establish if Euromoney is the best owner of the businesses and if the use of capital within the Asset Management division delivers the best value to shareholders.
Euromoney had GBP41.2m of cash on the balance sheet at end June (up from GBP29.3m at end March), with an undrawn committed revolving credit facility of GBP240m (with an uncommitted GBP130m accordion), giving plenty of firepower for potential acquisitions as well as resource for organic investment. We make no adjustments to our forecasts at this juncture.
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Euromoney Institutional Investor is a global, multi-brand information business that provides critical data, price reporting, insight, analysis and must-attend events to financial services, commodities, telecoms and legal markets.
Euromoney Institutional Investor: Strategic Review Of Asset Management
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