Investec PLC and Ltd Rathbones Group PLC on Tuesday said they have agreed an all-share merger of Rathbones with Investec Wealth & Investment Ltd to create one of UK’s leading wealth manager.
Investec W&I UK includes Investec’s wealth and investment businesses in the UK and Channel Islands but excludes Investec Bank AG and Investec Wealth & Investment International (Pty) Ltd, both of which will remain wholly-owned subsidiaries of Investec.
The merger will create UK wealth manager with around £100 billion of funds under management and administration, the two companies said.
The enlarged Rathbones will remain an independent premium-listed company in London operating under the Rathbones brand with Investec as a long-term, strategic shareholder. It will continue to be led by Rathbones Chair Clive Bannister and Chief Executive Officer Paul Stockton.
Under the terms of the deal, new Rathbones voting and non-voting shares will be issued in exchange for 100% of Investec W&I UK’s share capital.
Following completion, Investec will have an economic interest in Rathbones’ enlarged share capital of 41.25% but its voting rights will be limited to 29.9%. Investec will receive both voting ordinary shares and convertible non-voting ordinary shares that may convert into ordinary shares on a 1-for-1 basis.
Existing Rathbones shareholders will have an economic interest of 58.75% and voting rights of 70.1%. The terms of the combination imply an equity value of about £839 million for Investec W&I UK.
Rathbones shares were up 0.6% to 1,896.00 pence early Tuesday in London, giving the company a market capitalisation of £1.24 billion. Investec shares were up 2.4% to 455.00p in London. They were flat at R 98.16 in Johannesburg.
The two companies said the merger will target annual run-rate cash synergies of at least £60 million, driven primarily by cost savings as well as higher net interest income.
‘This transaction not only presents a compelling strategic and financial rationale, but also accelerates Rathbones’ growth strategy,’ Rathbones Chair Bannister said.
On the merger, Investec Chief Executive Fani Titi said the strategic fit of the two businesses was compelling, with complementary strengths and capabilities to enhance the overall proposition for clients.
‘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,’ Titi said.
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