Scandal-hit Davy attracts €105m bid for its global fund management unit

Size of bid for by global financial services provider Waystone for one part of Davy business puts spotlight on Bank of Ireland, which is reportedly prepared to pay up to €500m to acquire all of the company

Davy had put itself up for sale in March just days after the Central Bank slapped it with a €4.1m fine after a multi-year investigation disclosed the broker failed to detect wrongdoing in a 2014 sale of Anglo Irish bonds. File Picture: Niall Carson

Davy Stockbrokers, the country's largest broker that was enveloped in scandal this year, has attracted a €105m bid from global financial services provider Waystone for one part of its business, the Irish Examiner understands.

The size of the bid for Davy global fund management unit is significant and puts a spotlight on Bank of Ireland, which is reportedly prepared to pay up to €500m to acquire all of Davy.

The news of the new bid for a little known part of the broker’s business suggests the broker may fetch more than once thought when details of the trading scandal first emerged in March.    

Waystone's bid raises the potential of other offers from financial services players that seek to acquire parts of the broker. 

Davy had put itself up for sale in March and appointed Rothschild to oversee the sales process just days after the Central Bank slapped it with a €4.1m fine after a multi-year investigation disclosed the broker failed to detect wrongdoing in a 2014 sale of Anglo Irish bonds.

The transaction involved what the Central Bank called a consortium of 16 staff, that included senior management shareholders, and their participation in both sides of the trade, without the knowledge of the client.

Waystone is a rapidly growing international provider of regulatory and support services for global fund managers. It is run out of Ireland by global chief executive Derek Delaney and about half of its 500 staff work from locations in Dublin and in Cashel in Co Tipperary.

Its has international offices in Luxembourg, London, Switzerland, New York, Singapore, Hong Kong, and the Cayman Islands and recently announced a significant backing from equity investor Montagu. Waystone wouldn’t comment on the bid.

Davy Global Fund Management, the unit that Waystone has valued at €105m, is difficult to value, industry sources said.  

The main profit engine at Davy is its direct private client business and is believed to be the part of the business that Bank of Ireland is likely to be most interested in acquiring. 

Davy was stripped of its role as a primary dealer to the National Treasury Management Agency as a seller of Irish sovereign bonds in the wake of the Central Bank fine in March.