Fund Management

The Rensburg’s Carr Sheppards Deal, or is it the Rathbones Rensburg Deal?

Contributing Editor, 24 March 2005

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In the world of wealth management it is rare that one sees a takeover as weird as that of London-based Carr Sheppards Crosthwaite by Leeds-b...

In the world of wealth management it is rare that one sees a takeover as weird as that of London-based Carr Sheppards Crosthwaite by Leeds-based Rensburg. Weeks before the takeover, CSC’s parent company Investec was meant to be acquiring Rensburg, not the other way around.

And if that is not enough to digest, Rathbones, the London-based private asset manager, which has been in a bidding war for CSC, still wants to takeover Rensburg and has recommended to the shareholders of the Leeds-based firm not to take any action on the Investec deal.

Whatever the outcome of the competing deals and the potential counter-bids, one thing is for certain - one less wealth management firm is likely to exist in the next few days, if not two less.

To say that consolidation is happening in the UK wealth management sector could be a misplaced judgement, especially when new firms spring up from nowhere just as rapidly as one firm buys another. But this latest episode suggests there is certainly a lot of appetite for acquisitions among wealth managers.

Just a day before the deal was announced, Evolution, a London-based stockbroker said it was considering an acquisition to bolster its private client arm, Christows. Speculation in the UK media suggested Evolution might target Brewin Dolpin, which has about £15 billion ($28 billion) of private client assets under management.

Evolution has a considerable amount of spare cash to make this happen. In its recently released annual results, the stockbroker said it had a cash pile of at least £170 million to make acquisitions. It could borrow the rest to finance the Brewin deal.

The acquisition of Brewin would create (or should it be evolve) a formidable wealth management business for Evolution. But just as nothing seems certain in the Rensburg, CSC, Rathbones triangle, nothing is also certain for Evolution. The firm’s chief executive Alex Snow said that Evolution itself might become involved in the current consolidation in the stockbroker sector.

Last month two of the UK’s oldest stockbrokers, Durlacher and Teather & Greenwood, were acquired by investment bank Lazard and Icelandic bank Landsbanki respectively.

UK stockbrokers Shore Capital, Singer & Friedlander, Williams de Broe and WH Ireland Group have also been mentioned as possible takeover targets. All these brokers have private client businesses.

So what of the possible Rensburg/CSC deal—if it goes through? The new group, Rensburg Sheppards, will have £10.3 billion of funds under management and annual revenues of £84 million. Combined net profits are over £24 million. All this adds up to a formidable force in UK wealth management. In assets under management terms, the new firm would be elevated into the top table of wealth managers.

But what happens if Evolution buys Brewin, which would create an even bigger wealth manager to rival the likes of Coutts and Barclays. A new name—and big name—in the UK wealth management sector?

But then there is always the possibility that Rathbones will emerge the winner of the current acquisition machinations, with it acquiring Rensburg with CSC thrown into the deal, thereby creating a private client business with more than £17 billion under management—an even bigger player could yet emerge.

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