With R19 billion merger, Investec unites its UK wealth business with Rathbones
Rathbones Group has agreed to purchase Investec's UK wealth management division in an all-share deal worth £839 million (R18.7 billion). According to a statement issued Tuesday, Investec will be a minority stakeholder in the larger Rathbones firm, with a 41.25% interest and 29.9% voting rights. According to the firms, the merger will result in a
With R19 billion merger, Investec unites its UK wealth business with Rathbones
Rathbones Group has agreed to purchase Investec’s UK wealth management division in an all-share deal worth £839 million (R18.7 billion).
According to a statement issued Tuesday, Investec will be a minority stakeholder in the larger Rathbones firm, with a 41.25% interest and 29.9% voting rights. According to the firms, the merger will result in a wealth manager with around £100 billion in funds under management and administration.
The acquisition is the latest example of wealth management sector consolidation, as growing regulatory, technology, and operational costs force businesses to consolidate.
To obtain scale, some consolidators have purchased advising firms and wealth boutiques. RBC Wealth Management agreed to buy Brewin Dolphin for £1.6 billion in cash last year in order to construct a £64 billion corporation.
The Rathbones-Investec combination “has been implemented through a capital efficient mechanism in a competitive and consolidated market where scale is more important than ever,” Investec Group Chief Executive Officer Fani Titi said on a media call Tuesday. “On the fundamentals, we are a strong fit.”
According to Nishlan Andre Samujh, financial director at Investec, the combination will result in annual cost and income synergies of over £60 million.
At of 9:27 a.m. in London trade, Investec shares were up 3.3%, while Rathbones were up 2.6%.
Rathbones will issue new shares in exchange for 100% of Investec Wealth & Investment Ltd.’s UK business and Rathbones, according to the terms of the deal. The larger Rathbones Group will continue to operate independently under the Rathbones name from its London headquarters, with Investec as a long-term, strategic stakeholder.
Sources said that Investec would be able to appoint two non-executive directors to the board of the new Rathbones firm, and Ciaran Whelan is one prospective candidate.
Rathbones CEO Paul Stockton said there would be changes as a result of the merger, but it is too early to give specifics.
