LONDON: JTC Plc announced the acquisition of CEES. Established in 2005, CEES is a market leading employee benefits platform with an internationally diverse blue-chip corporate client base.
It offers a broad range of employee benefit plans and product structures, is expert in the administration of a number of asset classes and provides client support services as well as administration.
CEES is being acquired from RBC Holdings (Channel Islands) Limited, part of RBC Wealth Management. Around 180 employees, including the CEES senior management team, will join JTC at completion, becoming part of the Institutional Client Services (ICS) Division. The transaction is subject to relevant regulatory approvals and is expected to complete in early Q2 2021.
The high quality CEES client book consists of over 430 corporate relationships and more than 890 plans, with assets under administration of c.£11bn. Client tenure is often in excess of 20 years due to the nature of solutions provided.
The acquisition is complementary to JTC’s existing corporate and trustee services and significantly enhances the Group’s employee benefits offering, expanding a service line that has good organic growth potential due to market trends that support the increasing adoption of employee benefit programmes.
CEES employees serve a global client base from offices in Jersey, Guernsey, London and Edinburgh and this will support integration onto JTC’s existing platform, with employees in Jersey, Guernsey and London moving to existing JTC premises in those jurisdictions and JTC taking over the Edinburgh office of CEES.
The acquisition is the latest in a series of successful bank carve outs for the Group, with similar transactions having been completed in 2015 (Kleinwort Benson’s fund administration business) and 2017 (Merrill Lynch’s International Trust and Wealth Structuring business).
The consideration for the acquisition comprises £20m in cash funded from the Company’s existing facilities. In the financial year ended 31 October 2019, CEES achieved £23.5m in revenue and a consolidated loss before tax of (£1.2m).
As part of the JTC group, it is expected that margins will improve over time to reach the current Group guidance levels. The acquisition will be immediately earnings enhancing and is expected to deliver a return on invested capital (‘ROIC’) in excess of 10% in year 1 and for this to grow significantly in the second and third years of ownership.
The acquisition forms part of JTC’s ongoing growth strategy, which blends organic growth of the core business with disciplined inorganic growth governed by clear acquisition criteria and supported by a strong track record for thorough and successful integration to JTC’s global platform.
The Group continues to see further opportunities for both organic and inorganic growth across its two Divisions, covering a range of service lines and geographies, as it continues to expand its global platform and participate in consolidation within the sector.
Nigel Le Quesne, CEO of JTC, said: “CEES is an established leader in the employee benefits market with a blue-chip client base and excellent people. The fit with our ICS Division offering is exceptional and I am delighted that its core service offering is so closely aligned with JTC’s strong shared ownership culture, which has been one of our key differentiators for over 22 years.
“We are pleased to welcome our new colleagues and clients to the Group and look forward to working with the excellent team at RBC to ensure a smooth transition of the business. We can see that demand for employee ownership solutions is growing globally and as well as achieving enhanced financial performance over the medium term once integrated onto the JTC platform, we see medium and long-term opportunities for good organic growth.”
Dave Thomas, CEO, RBC Europe, added: “We are extremely proud of the CEES business that RBC Wealth Management has built in the British Isles over the previous 15 years and are therefore pleased to see it transfer to the JTC Group, which has employee shared ownership at the heart of its culture.
“We believe that RBC and JTC share a number of important values, including a commitment to client service excellence and high levels of employee engagement. In addition, JTC has a track record of integrating acquisitions of this type in a manner that respects all stakeholders and in particular employees and clients. We will be working closely with the JTC team via a transitional services agreement to ensure that client service is transferred seamlessly.”
JTC is an award-winning provider of fund, corporate and private client services. Founded in 1987, the company employs c.900 people across its global office network and is trusted to administer assets of c.US$130 billion.
JTC is committed to its shared ownership culture and philosophy, with management and staff holding over 20% of the equity in the firm, clearly aligning the interests of clients, employees and other stakeholders.
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