Financial services company set to buy back £30m of its own shares

Financial services company IFG will buy up to £30m (€37.3m) of its own shares later this month, it confirmed yesterday.

At the time of its interim results in August IFG announced it would embark on a share buyback following the disposal of its international business for £70m.

In consultation with its advisers, Davy Corporate Finance, following the disposal, it looked at a number of factors including the company’s net cash position; the group’s ongoing earnings and cashflow generation; the group’s optimal capital structure; acquisition and investment opportunities; and the relatively low interest income capable of being generated by the group’s current cash balance.

The IFG board concluded that the reduction of bad debt and the return of up to €37.3m to shareholders, “was in the best interests of the group and shareholders, as it places the group in a financially strong and flexible position and provides shareholders with choice”, IFG said in a statement.

It is up to IFG shareholders if they wish to avail of the offer, which is fixed at £1.65 per share. This represents more than a 17% premium on the closing price last Friday.

“Assuming the maximum number of shares are tendered, 22.6m of the 126.5m in issue (17.9%) will be cancelled, reducing the shares in issue to 103.9m and generating earnings accretion,” noted Davy Stockbrokers’ analyst Emer Lang.

The company announced that it will hold an EGM on Nov 28 to consider the necessary resolutions to implement the offer. On Nov 14 it will issue a trading update.

“The key focus will be on the UK operations; in particular progress at James Hay where the challenge remains to build momentum in the self-invested personal pension business to a level where new business exceeds the expected transition in the legacy book (1,046 new self-invested personal pensions fell short of attrition of 1,703 in the first six months of 2012, but the group experienced a pick-up in activity levels in July/August) while managing an increasingly onerous regulatory environment — in particular the transition to retail distribution review from January 1st 2013,” said Ms Lang.