The organisations said the enlarged Rathbones Group created in the share deal will have about £100 billion in funds under management and administration. Following the RBC Wealth Management/Brewin Dolphin deal in 2022, it is an example of M&A consolidation in the industry.

UK-based Investec Wealth & Investment, and Rathbones, the London-listed group, are to merge in an all-share deal to create the UK’s “leading discretionary wealth manager,” the firms announced today.

Rathbones will issue new shares in exchange for all of Investec W&I UK’s share capital, it said in a statement.  

The enlarged Rathbones Group will remain an independent firm under the Rathbones brand with Investec Group as a long-term, strategic shareholder.

The transaction, assuming it goes through, will be the largest such combination since RBC Wealth Management, part of Royal Bank of Canada, bought Brewin Dolphin in September last year. 

When the deal is completed, Investec Group will own 41.25 per cent of the economic interest in the enlarged Rathbones group’s share capital, with Investec Group’s voting rights limited to 29.9 per cent.

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).