UK stockbroker Collins Stewart is planning to launch an M&A advisory business and expand in the US when it completes its demerger at the end of this year.

The company is part of Collins Stewart Tullett, which is splitting its stockbroking and interdealer broking business into two companies to be listed on the London Stock Exchange. Joel Plasco, chief executive of Collins Stewart, said: "We could hire or buy a boutique. If there is an opportunity to acquire the right business at the right price, which could give us an instant capability, it would be attractive to us." The US equities business previously managed by interdealer broker Tullett Prebon has been transferred to Collins Stewart and the company intends to develop an advisory business to include M&A, debt advisory, private equity and restructuring. As well as launching an advisory business, the company wants to develop cash and equity derivatives in the US. Collins Stewart is a nominated adviser on Aim, the small companies market on the London Stock Exchange, which has become more attractive to US firms since the introduction of the Sarbanes-Oxley legislation. Plasco said: "We have raised large amounts of money on Aim selling US stock to UK institutions. But that is not the natural place to raise funds and we aim to create a primary distribution function in the US within 24 months." Collins Stewart Tullett last week reported it had more than doubled net profits in the first six months this year as costs fell and stockbroking revenues increased. Turnover increased by £40.5m (€60m) with the broking arm accounting for £31.3m of the improvement. Martin Cross, an analyst at Altium Securities, a UK boutique, upgraded Collins Stewart Tullett from hold to buy after the results and raised his price target from 800p to 950p. He said the performance of the equities business had been strong but this should be seen in the context of strong equity markets and a flat performance last year because of high staff turnover. Cross said: "We believe the institutional business is on a recovery path after a year of consolidation in 2005."