St James’s Place will likely drop from the FTSE 100, after shares of the UK’s biggest wealth manager dropped more than 55% over the last year.
In its quarterly report, the London Stock Exchange announced on Tuesday that SJP, whose shares are down about 45 percent this year, was set to be demoted on June 5. Grocer Ocado will also drop out of the blue-chip index and move into the FTSE 250. Cyber security company Darktrace, and housebuilder Vistry Group are both being promoted to the FTSE 100.
The demotion comes after a bruising 12 months for the Gloucestershire-based wealth manager, which employs one in eight of the UK’s 38,000 financial advisers.
SJP’s shares fell up to 16 per cent on a single day in July last year when it reduced its fees in advance of the Consumer Duty rules coming into force — rules designed to ensure financial services clients get a fair deal.
The charges also dropped by a fifth after it was revealed that SJP had been pushed to do more by the Financial Conduct Authority in October. These charges were criticized for being complex and opaque. The company announced that it would remove its punitive early-withdrawal charge for certain products from mid-next year.
The wealth manager felt the heat in early this year, when it was required to put aside £426mn to cover potential refunds for customers who felt that they did not receive a satisfactory level of service. SJP announced the day after its £426mn bill, that it would be reducing its dividend due to a decrease in expected profit growth. This sent its shares into a tailspin.
Net inflows also fell to £700mn, lower than expected and a reduction from £2bn in the previous year. Chief executive Mark FitzPatrick stated that outflows are at an “elevated” level.
Analysts believe that its declining market value may make it an attractive target for takeover. Analysts at RBC said that the discounted valuation and attractive long-term outlook make us see an elevated risk in the near term of this group becoming a target for M&A.
FitzPatrick, however, is eager to move on from the past. He believes SJP will be well placed to capitalize on the growth opportunities that stem from the demand for financial advice. FitzPatrick said in an interview that “about 8 per cent” of the UK population received advice.
SJP refused to comment on a possible demotion from FTSE 100.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.