UK-based wealth management firm Rathbones has agreed to purchase the UK wealth and investment business of Anglo-South African banking company Investec for $1.04bn.
Rathbones will acquire Investec Wealth & Investment (Investec W&I UK) to create a combined, large-scale wealth management firm that will operate under the Rathbones brand.
Under the terms of the agreement, Rathbones will acquire the entire issued share capital of Investec W&I UK, in exchange for 29.9% of its ordinary voting shares.
The UK wealth manager will also issue its convertible non-voting ordinary shares, where Investec Group will own a 41.25% stake in the combined company.
Investec will retain Investec Bank Switzerland (IBSAG) and Investec Wealth & Investment International (Investec W&I SA) and will operate them as its fully-owned subsidiaries.
The combined entity will have about £100bn in funds under management and administration (FUMA).
Investec Group chief executive Fani Titi said: “The combination of Investec W&I UK and Rathbones brings together two businesses which have a long-standing heritage in UK wealth management and closely aligned cultures.
“The strategic fit of the two businesses is compelling with complementary strengths and capabilities to enhance the overall proposition for clients.
“This will be supported by the strategic partnership which offers attractive growth and collaboration opportunities for both groups.
“The transaction represents a real step-change and long-term opportunity for our UK wealth strategy, underscores our commitment to the UK wealth management market and enhances our UK business as a whole.”
Upon completion of the transaction, Investec can appoint two representatives to the Board of the combined company, as non-executive directors.
The company can nominate two non-executive directors until it holds at least 20% of the combined entity’s share capital, and one non-executive director when it holds 10-20%.
Rathbones chairman Clive Bannister will continue in the same position, while CEO Paul Stockton and Investec W&I UK CEO Iain Hooley will lead the enlarged company.
The two companies will form a joint integration steering committee comprising senior executives from both the Enlarged Rathbones and Investec.
In addition, Rathbones and Investec will sign a strategic partnership which includes certain customary provisions along with lock-up and standstill arrangements, upon closing.
Rathbones chair Clive Bannister said: “Bringing Rathbones together with Investec W&I UK will create the UK’s leading discretionary wealth manager with approximately £100 billion of funds under management and administration.
“This transaction not only presents a compelling strategic and financial rationale, but also accelerates Rathbones’ growth strategy.
“Operating at scale allows the group to offer an even more attractive proposition to clients and colleagues, supporting future growth and creating significant value for Rathbones’ shareholders.”
