||This article uses bare URLs for citations, which may be threatened by link rot. (January 2014)|
|Industry||Stockbroking, Wealth Management, Asset Management, Financial Advisory|
|Founded||1926 (Dublin, Ireland)|
|Founder(s)||James and Eugene Davy|
|Divisions||Asset Management, Capital Markets, Corporate Finance, Private Clients, Research|
Founded in 1926, Davy is Ireland's largest stockbroker, wealth manager, asset manager and financial advisor and has offices in Dublin, Belfast, Cork, Galway and London. Davy offer a range of services to private clients, small businesses, corporations and institutional investors.
Employing over 460 people, Davy is an independent company owned by management and staff. Company operations are centred on five interrelated business areas – Asset Management, Capital Markets, Corporate Finance, Private Clients and Research.
Asset Management business is involved in the development and ongoing management of investment funds.
Capital Markets business offers clients services relating to the Irish equity market and European building materials, airline and gaming sectors, with a parallel offering in the international debt and currency markets. Activities are split into Institutional Equity Sales and Trading, Debt & Specialist Finance, Money Broking and Corporate Broking.
Corporate Finance business works with domestic and overseas companies, to provide a range of integrated corporate finance services.
Private Clients business works with individuals, charities and companies to meet their wealth management needs through financial planning, investment management and asset selection.
Research business provides analysis  across a range of sectors to help clients make more informed investment decisions. Barry Dixon is Head of Research at Davy, leading an equity research team across multiple sectors and disciplines. Chief Economist, Conall MacCoille was appointed in 2010 and produces Economic and Global Debt Research.
As the leading broker in the Irish market, Davy accounted for approximately 40 per cent of all dealings in Irish equities on the Irish Stock Exchange in 2009 and is the only domestically based primary dealer in Irish Government Bonds and acts as arranger on most Irish corporate bond issues. It acts as broker to 9 of the top 10 companies listed on the Irish Stock Exchange and 15 out of the 24 companies listed on the ESM (Ireland's equivalent of AIM). Davy is also responsible for circa 70 per cent of funds raised on the Irish Stock Exchange.
According to annual accounts published Davy had retained profits at the end of 2011 of €110.545 million compared with €124.99 million in the previous year. This €15 million reduction in its accumulated profits is believed to have been the result of the dividend payment to shareholders. When added to last year’s profit, it indicates a distribution to the 100-plus staff who participated in the management buy-out of €25 million. Davy closed last year with net assets of €131.1 million. This is described as a “strong financial position”, with its regulatory capital amounting to three times the statutory requirement. The Stockbrokers has held talks with AIB and Bank of Ireland to refinance its debts of €140m, which are fully performing, and are due to be refinanced in 2014.
James and Eugene Davy were raised in Rathmines and James, on the advice of his UCD economics professor, decided to enter stockbroking after graduating with a degree in Economics, while Eugene graduated with a Law degree.
In 1926, a few years after Irish independence, James Davy became a member of the Dublin Stock Exchange and was soon joined by his brother Eugene to establish J&E Davy, with its first office located on Westmoreland Street. At the time, Irish stockbroking was dominated by brokers who trained in London and lacked a more specific Irish perspective. The bulk of business consisted of buying and selling major British-quoted shares for private clients. It was in this environment that J&E Davy set about building up a stockbroking business.
Over the next two decades the two brothers gradually built up the company by tapping into the slowly emerging Catholic middle class, (the majority of its competitors being run by Protestants). It was also helped by Eugene Davy's contact's obtained through playing rugby, being capped 34 times for Ireland, acting as manager of the national team, and eventually becoming President of the IRFU.
In 1988, Bank of Ireland acquired a majority stake in Davy and increased that to 90% in 1992.
In 2004, Davy opened an office in Cork providing wealth management and corporate finance services to clients in the Munster region.
By 2005, Davy was responsible for the listings of over 60% of the companies.
In 2006, it became independent again following a management and staff buy-out of the company with loans provided by Anglo Irish Bank for €316 million, a figure acknowledged to reflect top of market conditions. This year also brought the opening of another regional office for Davy, located in Galway.
Davy Private Clients invested in the Maldron Hotel Group through Dalata with former Jury's chief executive Pat McCann and TVC Holdings in 2007. The same year, Davy opened a dedicated office for Northern Ireland, located in Belfast city centre.
In August 2010, Davy opened its first overseas office in London.
Davy Private Clients were significant shareholders in Azur Pharma, who announced their merger in 2012 with US rival Jazz Pharmaceuticals which will be headquartered in Dublin.
Davy is the only Irish dealer in Irish Government Bonds, which returned to the market for the first time since 2010 in January 2012.
Davy Private Clients were part of those who secured shares in the social networking giant Facebook through their investment in Tiger Global Management's funds. 3 months later the stock lost over a quarter of its starting value, which led to the Wall Street Journal calling the IPO a "fiasco."
In March 2012, following a four-month trawl, both nationally and overseas, Ivan Murphy was appointed Head of Davy Corporate Finance.
Davy is advising the Irish Government on the sale of the national lottery license, currently operated by An Post, owned by the State. Groups who have been put forward as interested in this license include GTECH Corporation, which is owned by Italian gaming giant Lottomatica.
On 8 March 2012, Davy announced the acquisition of Bloxham's private client business, Bloxham will transfer this business to the Davy offices in Dublin and Cork. The following May, Davy announced that it had acquired Bloxham's asset management business. The deal, together with the acquisition of Bloxham's private client business adds approximately €1.2billion to the value of assets under management by Davy.
On 8 June 2012, Davy was voted Ireland's No.1 brokerage in the Thomson Reuters Extel Pan-European Survey 2012.
On 26 July 2012, Ireland borrowed more than €5 billion from global money managers in stunning return to the bond markets. Davy is the only Irish primary dealer in Irish Government bonds and commented that the amount of cash raised far exceeded even the most optimistic estimate.
On 3 October 2012, Davy launched Davy Select, an online investment fund “supermarket” aimed at consumers looking to invest as little as €500 in a pension. The platform – which cost Davy €10 million to develop – is modelled on UK online fund selection sites which have captured 20 per cent of the market in the past five years. The new service is available online or via a mobile app. Davy called for the abolition of exit charges by all pension providers “so that consumers can invest on the basis of performance and service and not be restricted by anti-consumer lock-in agreements”.
The Dublin Lectures 2012, The Little Museum of Dublin
On 1 March 2012, Davy announced its sponsorship of the ‘Dublin Lecture Series 2012’ at The Little Museum of Dublin situated on Stephens Green, Dublin. Theses lectures that take place monthly, explore the history of Dublin and her people.
The Davy Portrait Awards
On 9 June 2008, Davy launched the Inaugural Davy Portrait Awards, in association with Arts & Business. The main prizes total €19,000 and were awarded by a judging panel of Royal Hibernian Academy President Stephen McKenna, Royal Ulster Academy President Rita Duffy and international art critic and writer Gemma Tipton. The 2010 Davy Portrait Award was won by Ian Cumberland, a Northern Ireland based artist. The 2008 Davy Portrait Awards was won by Joe Dunne, a portrait artist based in Dublin.
The next year the firm was the subject of an Irish Stock Exchange inquiry over the handling of the floatation of Greencore plc, the recently privatised Irish Sugar Company. The then Taoiseach, Albert Reynolds did not hold back in his criticism "you employ professional people to do the job...it was not done in a professional manner." The Managing Partner resigned.
Davy admitted that its representatives in 1999 devised a Liechtenstein based tax evasion scheme uncovered by the public service broadcaster, RTE. A Davy spokesman confirmed that the scheme outlined in the memo was not used.
In a high profile 2005 insider dealer case, the chief executive of Fyffes plc whose shares were the subject of the illicit trading said that he was "set up" by Davy and misled by a presentation to investors by Davy on behalf of his company. He also told the High Court he believed there was an arrangement between Davy and the party found responsible by the courts of insider dealing for the purpose of selling the shares they held in his company. Following the conclusion of the case, the High Court appointed an Inspector Bill Shipsey SC to review certain aspects of the case. In his report, the Inspector, found that the CEO of DCC, described variously as "careful and cautious", had "genuinely believed" that the Fyffes report was not price sensitive, backing up the findings of High Court trial judge Justice Mary Laffoy, What motivated DCC and its CEO, Laffoy found, "was the opportunity to make a substantial profit because of Worldoffruit.com". Again, Shipsey felt there was no case to answer. The inspector also found that DCC and its CEO, despite being on the wrong end of Ireland's only ever insider-dealing judgment, operated the "highest standards" of corporate compliance and governance. On publication of the report the Director of Corporate Enforcement decided that no action would be taken by him on foot of allegations of insider trading.
Two reports of an investigation into the "wholly inappropriate sale of perpectual bonds" by Davy to credit unions failed to involve any of the credit unions affected, leaving them "in the dark and powerless to add any value to the findings of this investigation”. The Irish Stock Exchange, who has Davy as one of its largest shareholders, and the Central Bank of Ireland then declined to give them access to the reports. The Chairman of one the Credit Union's who suffered large losses told his members '‘The failure to publish the reports is to place the complaints process in a shroud of secrecy. Such a failure of openness, transparency and fairness can only serve to undermine confidence in the complaints process, forcing those with grievances into the courts. Such a course of action is not in the interest of any of the stakeholders." A statement issued by the Irish Stock Exchange in relation to these reports acknowledged important mitigating factors such as: the changed investment demands of credit unions which were seeking higher yield investments, fundamentally altered conditions in bond markets, and the extensive interaction between Davy and its credit union clients. The Exchange stated that it was satisfied that Davy had taken appropriate remedial action to ensure that internal controls and conduct of business procedures had been rectified to mitigate against any recurrence of the breaches discovered.
The broker attracted adverse criticism for continually writing glowing reports about its largest client and former owner Bank of Ireland by always setting price targets about the current market price. In February 2008 with the price at €9.59 it wrote "A low risk balance sheet and cheap valuation provide a safe place to hide...This is a low risk bank." 13 months later the price was at €0.12.
The Financial Services Ombudsman in July 2008 claimed a legal challenge by the stockbrokers was aimed at, in effect, 'setting aside' their office. Davy rejected this, saying it supports the Ombudsman's office. The case went to the Supreme Court and Davy won
Davy private investors loaned €58.5 million to the developer Bernard McNamara to fund his acquisition of a stake in the Irish Glass Bottle site in Dublin's Ringsend in 2006. In 2009 Davy private investors took legal action against Mr. McNamara for breach of his loan obligations and secured a summary judgment in January 2010.
Enfield Credit Union agreed to accept a €35 million offer from Davy to credit unions affected by the sale of investment bonds to settle its claim against the stockbroking firm that it claimed Davy mis-sold to them. The terms secured by Enfield’s advisers also applied to all the credit unions who are nursing losses of about €75 million on the €183 million worth of bonds Davy sold to them. Around 100 credit unions suffered a second round of losses because the bond that Davy acquired to compensate them for the earlier losses itself crashed in value.
Hundreds of clients of Davy, including former Anglo Irish Bank chairman Sean FitzPatrick. built up a 15pc stake in the American educational publisher, EMPG, as they participated in two equity-raisings—totalling more than $400m. The investors lost all of their money and the broker wrote to its clients apologising for not communicating more about their losses.
In 2010 the Central Bank of Ireland forced the broker to inform the effected clients of two adverse findings against them as an instrument sold "was not compliant with the Trustees (Authorised Investments) Order at the time of its sale as it was not listed on a recognised Stock Exchange'’ and '‘Davy had dealt as principal in the purchase and sale of the bond and was in breach of the rules of the Irish Stock Exchange by not disclosing this fact on its contract note'’ to the investors. The effected parties, who lost many millions, were said to be reviewing their legal options.
In December 2011, the Central Bank reprimanded and fined the firm for failing to report 61,542 transactions. Davy said that the breaches were "technical" and had been reported to the regulator by the firm in September 2010. "These were wholly technical reporting issues, with no client impact which were identified by Davy and voluntarily reported to the Central Bank, " a spokesman said.
Ireland has two large (one of which is Davy), and half a dozen medium-sized brokerages. A report by the Central Bank of Ireland in January 2013 warned there will have to be mergers of firms to ensure the industry survives, but this process will have to be done in a controlled way – because any instability in the sector could pose a danger to many people's savings, and prevent new businesses from raising money at a time when banks are not lending. As part of a consolation in the industry, Davy acquired both Bloxham's private client and asset management business during 2012. The deal added approximately €1.2 billion to the value of assets under management by Davy.
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