Jarvis Securities (LON: JIM) is selling its execution only broking business to Interactive Investor for £11m and winding down its clearing and settlement operations. The share price slumped 58.1% to 18p. This is the lowest level since the end of 2006.
The broking business generated £8.55m out of group revenues of £13.1m in 2023. Assets under administration ate £1.27bn. Interactive Investor is paying an initial £9m on completion and a further £1m 12 months later, then the final £1m in a further six months. The additional payments can be reduced if there are warranty or indemnity claims.
Completion will happen when client agreements are transferred and that should happen in early July. Assets under administration and number of customers should remain at 90% of their current level for the completion to take place. Some clients are not covered, and Jarvis Securities will help them to move to an alternative broker.
The board believes that winding up the remaining operations and returning the remaining cash to investors is the best outcome. It will take 15 months to wind up the business. There are no plans to make an acquisition and shareholder approval will be sought for cancelling the AIM quotation.
There was £5.5m in the bank at the end of June 2024, but it is unclear if any of that will go with the broking business. There are likely to be costs of winding up the business. The current market capitalisation is £8.1m.