Rathbones has completed its acquisition of Scotland’s second-largest wealth manager Speirs & Jeffrey for £104m, following regulatory approval.
The deal, which was initially predicted to reach £250m, will see funds under management increase by 18% to £44.5bn.
In a trading update this morning, the group said the £104m comprised £79m cash and £25m through the issue of one million new Rathbones shares. Shares will be locked into agreement for three years from completion.
A person familiar with the transaction told Portfolio Adviser that the reason for the discrepancy between the confirmed and predicted amount is because “£250m is the maximum possible”.
They said: “It’s all contingent on performance of the managers and the business. It’s far from likely to reach that.”
Rathbones said it is expected that initial consideration shares will begin trading on the London Stock Exchange from 3 September.
No rapid change
Portfolio Adviser understands that Speirs & Jeffrey will continue to operate as effectively a stand-alone business until June 2019.
As part of the acquisition, all Speirs & Jeffrey employees will transfer to Rathbones, with Russell Critchton, current chief executive of Speirs & Jeffrey, becoming head of Rathbones’ Scottish office.
The Speirs & Jeffrey team will continue to be based at George House in central Glasgow, joined by the Rathbones team.
In a letter to clients, Philip Howell, chief executive of Rathbones (pictured), said relationships with existing investment managers will “remain the same.”
He said: “At this stage there will be no change to the way Speirs & Jeffrey operates and you need take no action on receipt of this letter.
“However, you will be hearing from your own investment manager separately regarding the next steps that will take place. Clients of Speirs & Jeffrey will be invited to transfer to Rathbones in due course once Rathbones and Speirs & Jeffrey have formally joined together.”
Rathbones was ‘best fit’
News of the takeover was initially confirmed in April, following speculation that Rathbones was entering a £200m bidding war with Permira.
Crichton said the firm had been in discussions with “various carefully selected firms” over recent months after it thought “long and hard” about giving up independent ownership of the 112-year old firm.
“Our industry is undergoing rapid change and consolidation driven by a range of factors, and we have come to the view that S&J is already too big to be a boutique company and yet also too small to fully respond and continue to develop as it is.
“We have therefore been working steadily towards an appropriate change in ownership. Right at the start of this process, we identified Rathbones as the most likely “best fit” for S&J in terms of shared values in meeting the long-term interests of you our clients.
“In a sense we consider Rathbones to be a bigger version of ourselves, with the same underlying ethos and culture of care for the client, and with additional strengths and capabilities.”
