The terms of the combination imply an equity value of about £839 million ($1.04 billion) for Investec W&I UK. 

“The enlarged Rathbones Group will create the UK’s leading discretionary wealth manager with approximately £100 billion in funds under management and administration,” the firms said.

The combination is subject to, among other things, Rathbones shareholder and regulatory approvals.

The Investec W&I UK transaction includes Investec Group’s wealth and investment businesses in the UK and Channel Islands but excludes Investec Bank (Switzerland) AG and Investec Wealth & Investment International (Pty). These excluded entities will remain wholly-owned subsidiaries of the Investec Group.

Details
Investec said there is a “strong financial rationale” for the deal: significant value creation from cost and revenue synergies; an increased contribution from capital-light recurring earnings, with a greater weighting towards the UK; an earnings accretion to Investec Group’s shareholders; a protection of Investec Group’s strong capital position; and material cost saving in respect of Investec W&I UK’s planned technology spend.

Two Investec Group representatives will join the board of the enlarged Rathbones Group as non-executive directors when the transaction is completed.

Investec Group will be entitled to nominate two non-executive directors for as long as it holds at least 20 per cent of the enlarged group’s share capital;.

Investec Group intends the nominated non-executive directors to be Ciaran Whelan, executive director of Investec plc, plus one other, who Investec Group anticipates will be a current Investec plc non-executive director. 

The expanded Rathbones Group will continue to be chaired by Rathbones chair Clive Bannister with the executive leadership team, under Rathbones CEO Paul Stockton, plus a leadership team from both businesses, including Iain Hooley, CEO of Investec W&I UK (subject to regulatory approval).