40 Friday May 27 2022 | the times
Business
One of Britain’s biggest DIY investment
platforms has warned the growing cost-
of-living crisis will erode the cash that
consumers put aside to invest into
markets as it reported a fall in profits.
AJ Bell said yesterday that the impact
of soaring inflation was likely to cause
“a potential short-term headwind for
inflows” on to its platform, which
allows people to trade shares, buy funds
and manage Isas and self-invested per-
sonal pensions.
It came as the FTSE 250-listed busi-
ness reported a decline in half-year pre-
tax profit to £26.1 million in the six
under administration as of the end of
March, lifted by net inflows of £2.8 bil-
lion in the previous six months. Its cus-
tomer base also grew by 35,555 during
the period, to 418,309.
Revenues earned from transactional
fees fell 17 per cent year-on-year to
£18.2 million as dealing activity de-
clined from the “significantly elevated
levels” last year. Overall, revenues were
up 2 per cent to £75.5 million.Intermediate Capital enjoys
record year of new business
Patrick Hosking Financial EditorIntermediate Capital has brought
forward its target for client wins after
securing a record $22.5 billion of new
business in the year to March 31.
The fund management group said it
had seen no let-up in investor appetite
for the alternative asset classes it mana-
ges — which include private equity, pri-
vate debt, infrastructure and property.
Benoit Durteste, chief executive, said
the 38 per cent fall in the Intermediate
share price between last November and
its level immediately before the results
was because of a “misperception” about
what the company did.
The group reported a 12 per cent in-
crease in pre-tax profit to £569 million
while lifting the dividend by 36 per cent
to 76p. That sent the shares up strongly
by 111p, or 7.6 per cent, to close at £15.70.
Last year it set itself a goal of winning
$40 billion of new business by the end
of 2025, but yesterday pulled forward
that target to the end of 2024 because of
the recent strength of client inflows.
London-based Intermediate is a
member of the FTSE 100 and manages
$72 billion of assets on behalf of pension
funds, sovereign wealth funds andother investment institutions. Clients
include Brunel, the umbrella pension
scheme for council workers across the
West Country. It also invests its own
capital in the funds it manages.
It was brought low by the banking
crisis, when it specialised in mezzanine
finance, a hybrid of debt and equity
funded from its own balance sheet. It
has since developed a significant opera-
tion investing on behalf of third parties.
Durteste said the group still suffered
from a legacy perception, including
that it was highly geared and therefore
vulnerable in downturns. Gearing
going into the banking crisis was 3 to 1,
he said. Now it was 0.5 to 1, he added.
The funds raised from clients includ-
ed €7.2 billion in a new hybrid vehicle,
Europe VIII, which was a record for a
single Intermediate fund. The fund will
invest across alternative asset classes
and is managed by Durteste personally.
End-investors are increasingly allo-
cating cash to “alternative” and illiquid
asset classes, fearing that returns from
the conventional assets such as listed
equities and bonds could be thin over
the next few years.
Net asset value per share by the year
end was 696p, up from 566p.T
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Price rises ring alarm for DIY traders, says Bell
Ben Martin Banking Editor months to the end of March from
£31.6 million a year ago as a pandemic-
induced boom in retail investing faded.
AJ Bell and rivals including Har-
greaves Lansdown were boosted during
the pandemic as retail investors rushed
to take advantage of cheap asset prices
after sharp falls early in the crisis. In
addition, lockdowns helped Britons to
build up their savings, which they sub-
sequently invested.
Yet the relaxation of restrictions has
caused investment activity to cool and
return to levels seen before the crisis,
knocking shares in companies that had
benefited from the investing frenzy.
AJ Bell stock is down about 30 per cent
year-to-date, although it was up 20¼p,
or 7.9 per cent, at 275½p yesterday after
the company lifted its guidance for its
full-year profit margin to about 35 per
cent. Its previous forecast had been for
a margin of between 32 and 33 per cent.
“The rising cost of living is likely to
impact investable income across the
economy with the savings ratio falling
back towards pre-pandemic levels,”
AJ Bell said. “This presents a potential
short-term headwind for inflows.”
Andy Bell, chief executive and co-
founder of the group, said the com-
pany’s data suggested that cost-of-liv-
ing worries were so far having a “nu-
anced” impact on investor behaviour.It has found that while existing cus-
tomers of its direct-to-consumer plat-
form had each put £7,000 on average
with AJ Bell during the first-half last
year, this had fallen to £5,000 in the lat-
est six-month period.
While last year’s sums will have been
swollen by the Covid investing boom,
part of the decline this year is likely to
have been due to worries about the eco-
nomic environment. “People are just
being a bit cautious,” Bell said. By con-
trast, new customers of AJ Bell had put
£30,000 on average each on to its plat-
form during the most recent first-half,
compared with £21,000 a year ago. Bell
said these were probably people who
did not “join the investing party during
Covid” and were now playing catch-up.
Bell founded the Manchester-based
company in 1995 with his friend Nicho-
las Littlefair, and it has since grown to
become one of the country’s leading
DIY wealth management platforms.
The company had £74.1 billion of assetsShare price
Source: Refinitiv200300400500pJul
2021Oct Jan
2022Apr