Investment management was the star performer for Savills last year, as the company reported a 52% uplift in profits and 41% rise in assets under management.
And with the confirmation of its €21.5m (£15.5m) acquisition of SEB Asset Management, the division is set to become even more valuable to the agent.
The purchase of SEB AM adds a further €10bn of assets to Cordea Savills, the firm’s investment management business, which in the year ended 31 December posted an AUM rise from €5.2bn to €7.2bn. Underlying profits rose to £4.4m, up from £2.9m, with margins improving from 11.2% in 2013 to 15.7% at the end of last year. Revenues rose by 8% to £28m.
Group chief executive Jeremy Helsby said: “We had said previously that to be a player in asset management you need to be large and while we had a great business in Cordea Savills, its assets under management of about €7bn weren’t big enough.”
He added: “The quality of earnings from investment management is high. It is a high-margin business and not particularly cyclical. We as a business like that.”
The bulk of assets managed by SEB are in Germany, with around €1.5bn in Asia. Some 60% are held on behalf of German open-ended funds, which are due for liquidation under German regulatory rules. The balance is managed on behalf of institutional clients.
Strong group trading for 2014
Savills’ group revenues increased by 19% to £1.1bn in the 12 months to 31 December, with pretax profit rising by 34% to just over £100m. The transaction advisory division reported revenues up by 38% to £495m and profits up by 44% to £67.8m. The UK provided the bulk of revenues, with an 11% rise on 2013 to £514.4m and a 21% rise in profits to £67m. The acquisition of US-based Studley boosted US revenues to £112.3m, up from just £6.8m in 2013, and turned a £1.6m loss into £12.4m of profit.
SEB AM’s chief executive has quit the firm to help BNP Paribas Real Estate expand its investment management business. Barbara Knoflach will join BNP PRE as global head of investment management and is tasked with expanding the firm’s AUM to €30bn. It currently manages around €20bn of assets.
