Investec to spend €32m on NCB in move away from traditional lending

Investec has agreed to buy Irish unlisted broker and wealth manager NCB for €32 million as part of the South African bank’s strategy to cut its reliance on traditional lending.

Investec, a €1.44 billion investment bank and fund manager, said it planned to pay for NCB in cash, although it could issue shares to help fund the deal.

Buying NCB will give Investec control of a firm with a presence in corporate finance, equities and fixed income. NCB also has €1.3bn in assets under management in its wealth business, an increasingly important focus for Investec. Quinn Financial Services Group has a 25% stake in NCB. There are around 60 other shareholders, mainly staff and former employees.

NCB chief executive Conor O’Kelly said: “The deal will bring together two like-minded and innovative businesses whose operations are very complementary.”

Investec has been bulking up in wealth management and other fee-generating businesses to offset slack demand for credit and as tougher regulations tie up more capital.

“As a small bank you just do not have the funding advantage to compete in the lending game,” said Patrice Rassou, head of equities at Sanlam Investment Management. “While a lot of these [wealth] businesses are linked to the markets, there’s a lot more annuity income from fees that you levy on clients.”

Investec’s chief executive for Ireland, Michael Cullen, said the deal would complement its existing capital markets operations here and help it further expand into fee-based businesses.

Investec, also listed in London, last year acquired mid-sized British investment bank Evolution Group for £233 million (€277.9m).

Previously it acquired another British firm, Rensburg Sheppards, which it rebranded as Investec Wealth & Investment.

Asset and wealth management account for about 40% of the bank’s operating income, compared with 29% in 2010.

Investec’s full-year profit in May fell by 5%, hit by exposure to Irish real estate.