The latest (polygamous) marriage in the private client wealth management space sees a more tightly-focused Jupiter join the Rathbone stable as the latter also picks up Tilney’s London division from Deutsche Asset and Wealth Management.
At first glance – great news for those investing in all parties.
Rumours of Jupiter's private client sale kicked off 2014, with Rathbones just one name in the frame, perhaps not surprisingly given its new chief executive Maarten Slendebroek was preparing to take the reins from Edward Bonham Carter after the latter’s 14 year tenure. The new role gives him more ownership in terms of executing the strategy he helped to build while in his previous role. Make no mistake: fund management is now the sole focus for the west London-based group.
Buy or buy more?
It frees up a lot of capital – adding an estimated £2m a year to Jupiter’s profit contribution, according to JPMorgan Cazenove, which rated it ‘overweight’. Similarly Numis and Citi tipped it as a buying opportunity.
The market is bullish on Jupiter with talks of special dividends or buybacks falling back into the hands of shareholders.
Jupiter Private Clients & Charities currently has around £630m in Jupiter funds – around 30%. So will that £630m remain in their hands or could we see some shift into other – possibly Rathbone UTM – portfolios?
Granted, without seeing the buy lists from either outfit, it raises the potential other question over resource.
Nick Sketch, senior investment director at Investec Wealth & Investment says the fund review process needs to happen almost immediately and if Jupiter funds didn’t feature very highly in Rathbones’ research process, those responsible would need to gen up rather quickly.
Numis Securities' analyst David McCann said of the forthcoming review: "It certainly won’t be clear-cut. If the investment managers deem those [Jupiter funds] to still be the most appropriate funds for their clients then it shouldn’t change just because the individual now works for a different company.
"Now while there is no real reason for which they should change the funds in which they are invested, Rathbones may choose to apply some additional risk controls that will, in time, limit the number of holdings held with one company [or the amount in any one fund], for example."
Don't change for change's sake
But McCann points out the importance of bearing in mind capital gains tax, warning that if any portfolio changes were to take place purely to ensure a client met a particular risk management metric, it might not be in the client’s best interests.
Citi added there was no more likelihood of future transfer away from the Jupiter funds (or in fact, any others in the client portfolios) than there was before the deal.
Rathbones clearly has made no secret of its ambitions to snap up the competition. In late 2012 Taylor Young Investment Management sold its private client to the acquisitive group for approximately £10m.
This latest move, alongside its purchase of Tilney’s London branch (the others have become part of Bestinvest under Permira) presents a picture of a very warm welcome awaiting other private client businesses touting their wares, as well as an additional opportunity for anyone wanting to pick off the crumbs that don’t transfer across to the Rathbone table.
