Sale of loss making Corporate Finance division welcomed.

Close Brothers Group (LON:CBG) has announced the successful sale of its corporate finance division.

The division reported a post-tax loss of £2.6m in H109 and according to Close Brothers this was included in the sum of the parts (634p) at a nominal valuation.

The successful bidder was Daiwa Securities - a Japan-based security company engaged in the securities, investment, financing and service businesses.

The business model is well suited to Daiwa Securities - whereas it frees up Close Brothers to concentrate on their three larger and more successful divisions - Banking, Asset Management and Securities.

However Corporate Finance is having a tough time with low activity in M&A and restructuring. It was winning mandates but these were tending to attract small retainer fees with compensation paid mainly on completion of projects.

Daiwa will be banking on an upturn in M&A and restructuring in the UK market to allow its purchase to yield positive returns.

The gross sale price is £75m, but Close will inject £8m of capital prior to completion, and assume to support ongoing losses in the current year.

The transaction is expected to complete by end August 2009.