Schroders has made a strategic purchase to strengthen its pensions funds services.
In a deal worth around £230 million, Schroders confirmed on Tuesday the purchase of River and Mercantile Group's UK Solutions division. The unit, which manages around £42 billion for clients, is responsible for RMG’s fiduciary management and derivatives businesses, and represents about 28 per cent of the firm's current market cap.
RMG said that the sale would allow it to develop the remaining specialist asset management business, with immediate proceeds going into expanding equities coverage, including "in-demand alternatives and private market products."
The asset and pensions fund manager, which debuted on the London Stock Exchange in 2014, set wheels in motion for a buyer back in August after unsolicited interest.
The sale is expected to boost Schroders' pensions funds capabilities, particularly in the defined benefit and defined contributions space, and bring the UK fund giant's AuM to over £760 billion.
RMG CEO James Barham will move over to Schroders to continue running the business, and report to chief executive Peter Harrison. The division "will retain" its approach under the new owners, Schroders affirmed. Alex Hoctor-Duncan will replace Barham as RMG CEO once the deal is complete.
At the time of writing, RMG shares were trading up 20 per cent on the news and are up by more than 80 per cent for the year.
“The business brings with it a well-respected team, with a strong track record of success and is a good cultural fit," Schroders' chief executive Harrison, said. “We see significant opportunities from this partnership.”
The transaction is expected to complete in the first quarter of 2022, subject to the usual approvals.