Close Brothers Group plc

THE SCOOP

Independent and noteworthy

Close Brothers Group is one of the United Kingdom's leading independent investment banks.  While most of its competitors have been bought up by larger global banks over the years, Close Brothers has managed to hold onto its independence by providing services to the often-neglected small and medium-size business segment.  The group is comprised of some 30 businesses, each with a managing team and a board of directors.  The bank operates in four primary segments: asset management (including wealth management and investment funds), corporate finance, securities (market-making) and banking (including treasury services and lending).

A Close family

The modern Close Brothers Group has its origins in a banking and investment firm founded in 1878 by W.B. Close and his brothers.  The Close family had more than 100 years of banking in their blood, including James Close, an advisor to Neapolitan King Ferdinand II.  W.B. Close and his brothers began their enterprise investing in cheap land in the American Midwest.  The company thrived on exploration, buying land and financing the White Pass & Yukon railway.  As the company expanded, it added banking, investment and lending as sources of income, offering these services primarily to a select group of wealthy individuals.  Following World War II, Close Brothers began investing in traditional mining, utility, property and banking projects.  Close Brothers launched a series of acquisitions in the 1980s, which greatly expanded its areas of operations.  The company capitalized on a recession in the United Kingdom in the early 1990s, acquiring a specialist in BES transactions (Close Brothers Investment) and automobile financing operations (Close Consumer Finance).  One of Close Brothers' most significant additions was Winterflood Securities, when Close acquired 91 percent of Winterflood for £19.1 million, in 1993.  Winterflood specializes in small company stocks and, as a market-maker, positioned Close Brothers to capitalize on the emerging high-technology stock bubble of the late 1990s.  In 2000, profits from the Winterflood operations comprised almost 60 percent of Close Brothers' entire operating profits.

Fattening up

In 2006, Close Brothers Group reported a profit before tax and goodwill of £157 million, an increase of more than 21 percent from the previous year.  Close Brothers announced in December of that year that it was able to raise a total of £445 million in loans for refinancing from debt marketsâ€"a record for the company.  In 2008, the firm announced that its total equity to be at £720.4 million and experiencing a slight dip in 2009 with the amount of £697.7 million.  Profits from Winterflood remained competent in 2009, which has resulted in a doubled increase of adjusted operating profit from £23.5 million the previous year to £47.3 million.

Corporate Finance

Close Brothers Corporate Finance offers advisory services to corporate and institutional clients in four areas: mergers and acquisitions, structuring and raising debt, special situations and IPO advisory.  The firm has an especially strong reputation in middle-market transactions (with values up to â'¬500 million), where it is one of the most active advisers in Europe on the basis of announced deals.  Close Brothers' special situations team concentrates on one-of-a-kind deals and has notably been engaged in high-profile financial restructurings such as British Energy and Parmalat.  While it holds its strongest presence in the United Kingdom, Close Brothers has expanded its corporate finance business into France, Germany, Spain and Italy.  The bank operates further abroad through a series of exclusive alliances with investment banks in other countries, including Harris Williams in the United States.

Changing chairmen

In November 2006, Close Brothers announced in its annual meeting, the retirement of Sir David Scholey as chairman of the company.  Scholey was succeeded by Rod Kent, who had led the management buyout of Close Brothers in 1979 and served as a managing director of the company from 1984 until 2002. Kent was then replaced as chairman in June 2008 by deputy chairman of Close Brothers Strone Macpherson.  Serving Close Brothers as chief executive currently is Preben Prebensen, who was previously group chief investment officer and a member of the group executive committee at Catlin Group.  Prebensen was appointed as chief executive of the company in April 2009.  Prior to Prebensen’s appointment, Colin Keogh held the position of chief executive for six years.  The Close Brothers reported that the financial crisis did little to affect the operation of the company.  Backed by a significant change in senior management, the business still remains well-funded and is keen on developing areas where it has the strongest capabilities and potential for growth.

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Close Brothers Group plc


10 Crown Place
London EC2A 4FT
Phone: +44-20-720-4000
Fax: +44-20-720-4044
www.closebrothers.co.uk

STATS


  • Employer Type: Public
  • Stock Symbol: CBG
  • Stock Exchange: LSE
  • CEO: Preben Prebensen
  • 2008 Employees: 2,600

Key Financials

  • 2008 Income: $90 million
  • 2008 Revenue: $509 million

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