A potential £500 million-plus valuation for a privately owned financial advice firm could lift sentiment towards St James's Place PLC (LSE:STJ), according to UBS.
The bank highlighted a Citywire report that My Pension Expert, an advice business, may fetch more than £500 million in a sale process, with first-round bids due earlier this month.
UBS said that valuation would represent 16 to 17 times the firm's targeted earnings before interest, tax, depreciation and amortisation of £30 million for the current financial year.
That would rank among the most attractive multiples seen for an advice firm, given My Pension Expert remains relatively small with only 24 advisers and £1 billion of assets under advice.
The bank argued the deal carries a positive read-across for St James's Place, Britain's largest wealth manager, which trades on a low-teens multiple of forward earnings despite double-digit earnings growth expected over the medium term.
UBS contrasted the My Pension Expert multiple with past transactions struck at lower levels, noting Aviva paid £385 million for Succession Wealth and its £9.5 billion of assets, while NatWest's recent acquisition of Evelyn Partners was pitched at around 15 times earnings.
On an assets-under-advice basis, however, the My Pension Expert valuation equated to about 4%, in line with previous deals.
Shares in St James's Place rose 3.7% on the day, making it the strongest performer among European insurers, a sub-sector that was broadly flat.
UBS rates St James's Place a buy with a target price of 1,520p.
