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Tavistock Investments: THE INVESTMENT CASE

Tavistock Investments at an inflection point as it generates operating profits and cash

Strong organic growth complemented Tavistock’s buy and build strategy
coins as a bar chart denoting financial growth
INVESTMENT OVERVIEW: TAVI The Big Picture
The wealth manger is growing its own business strongly

Wealth manager Tavistock Investments PLC (LON:TAVI) is at an “inflection point”, its chairman Oliver Cooke said, with the company now generating cash alongside operating profits.

The landmark was recognised by the market too, which pushed the shares up 30% early on. They succumbed to a little profit-taking to settle 9% higher 3.7p by 12.25am.

Turnover for the year ended March 31 was up 22% at £36.4mln giving EBITDA of £537,000, up 421%. Cash generation was £497,000 in the second half.

READ: Tavistock Investments launches three new funds

The company saw its net assets more than double to £18.2mln in the period, while funds under management were ahead 332% at £769mln.

Strong organic growth complemented Tavistock’s buy and build strategy which saw it acquire Abacus Associates and PB Financial Planning.

Both are well established, profitable and cash generating advisory businesses and, according the firm, “contributed strongly” to the continued growth of the business.

“We have made significant progress across all key areas of the business and established a solid foundation for future success,” said chief executive Brian Raven.

“This is the product of a robust business model and the hard work of a strong operational team.”

Chairman Cooke added: “The company has reached an inflection point in its development and has begun to generate cash as well as report operating profits, which leads the board to anticipate the reporting of improved performance over the coming year.

“This is a time of great opportunity for the company and I look forward to reporting to you in the near future on the next milestones that our company achieves.”

The company is gaining critical mass purchasing independent financial advisers and then plugging them into its discretionary fund management operation.

It now has over 300 advisers helping 70,000 private clients looking after £4bn of investments, of which around fifth is managed by its investment business, Tavistock Wealth.  Its selling point is this integrated approach.

Savvy business model

Clients like it and there’s opportunity to take two bites of the cherry. It earns a fee for both giving advice and investing customers’ savings.

“A simple truism is that those businesses that are integrated, that extract more than one business stream from a client, do an awful lot better than those that don’t,” said CEO Raven in a recent interview with Proactive Investors.

Now, IFAs must provide the right product for their customers and not simply the one that fits the Tavistock business plan.

That said Tavistock’s conservative house investment-style, its funds’ performance and the choice of investment portfolios and managers it offers should have mass appeal.

James Dolaman, analyst at Capital Network, reckons there is scope for 50% of assets under influence to be brought in-house (read the full note here). Currently, the figure is closer to 12%.

Past success

Raven and Cooke are best known for Card Clear, a pioneer of fraud protection for credit cards and one of the first stocks to list on the alternative market back in the 1990s.

The dynamic duo built up business (which changed its name to Retail Decisions) from a start up to a value of around £100m and are hoping to repeat the alchemy with Tavistock.

“The tactical approach we have taken in the past of creating an investment vehicle and building value hasn’t changed,” said Raven.

“I think we will do that, build value. But, at the same time, we must not forget the retail client, our customer, sits at the heart of everything we do.”



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