IFG and the roller-coaster ride of holding sale discussions in public

The majority of offshore fiduciary businesses are privately owned companies and most sales and acquisitions are negotiated behind closed doors, with strenuous efforts made to keep the mere existence of a sale process out of the public domain until there has been a successful signing.  It certainly isn’t always easy to achieve this – offshore jurisdictions tend to be small territories, where news travels fast and it can be difficult to keep industry gossip under wraps, despite the most tightly drafted confidentiality agreements.  Spare a thought though, for those who have to conduct their business in the glare of the public eye.

Last year, IFG Group, which has a number of financial services businesses within it, including an IFA business, a personal pension programme administrator and an offshore trust company, was approached by Bregal Group in relation to a possible takeover by the private equity house of the whole group at a price of 1.8 euros per share.  Being a listed company, IFG had to make the talks public knowledge by making a formal announcement, and the company’s shares rose strongly to a peak of 1.95 euros, only to plummet dramatically in September to a low of less than 1 euro per share after it was announced that the talks with Bregal had failed to lead to a firm offer.  Since then, the IFG share price has recovered to a small degree, but for the most part has languished in the doldrums for the best part of 6 months.

Today, however, saw IFG post a significant intra-day rise of around 25 cents, to 1.5 euros. The reason for the spike? - The Board of IFG has announced that it has received an unsolicited expression of interest in relation to a possible purchase of its International Corporate Trustee Services division, which contributes roughly 35% of the group’s profits from an income of £16.6 million.   It is no great surprise that an approach has been made – we are witnessing a period of a great deal of consolidation in the trust company market and there are more willing buyers out there than quality businesses available for sale.  For most trust companies, any exploratory talks following an offer can be carried out in the privacy of the target’s own four walls, and if the talks go nowhere, no-one need be any the wiser.  However, IFG does not have this luxury and whilst the share price rise must be a welcome development in many ways, the company must, given its recent history, be wary of the share price volatility that accompanies such talks in the public arena.