Raymond James is set to acquire Charles Stanley in a £279m deal that one industry commentator thinks should help clarify its identity in the UK wealth management market.
A stock exchange announcement on Thursday said both boards had reached an agreement for Raymond James UK Wealth Management Holdings to buy Charles Stanley at a value of 515 pence a share, 43.5% above Wednesday’s closing price.
The deal, subject to regulatory approval, is expected to complete in the last quarter of 2021.
Raymond James said it had long admired Charles Stanley’s “reputation, heritage and its talented pool of investment managers, financial planners and professionals”.
It said the acquisition provided both firms with the opportunity to “accelerate the growth of their respective UK wealth management businesses, creating operations with the scale to support expansion and flourish in a highly competitive and consolidating UK marketplace”.
The acquisition adds approximately £27.1bn in client assets to Raymond James, taking its total in the UK to over £40bn. It will also take on about 200 of Charles Stanley’s wealth managers.
Charles Stanley will retain its brand
Charles Stanley will continue to operate as a separately branded firm, doing business as Charles Stanley, a division of Raymond James. The acquisition is not expected to result in significant job overlap or staff reductions at either firm.
Charles Stanley chairman David Howard will remain in his role while Paul Abberley (pictured) and Ben Money-Coutts will continue as Charles Stanley CEO and chief financial officer, respectively. Raymond James chief executive of UK operations Peter Moores will have overall responsibility for the UK businesses of Raymond James and Charles Stanley.
Other than Howard, Raymond James expects to replace some or all of Charles Stanley’s other non-executive directors following the acquisition.
‘No one is quite sure what Raymond James is’
Fundscape chief executive Bella Caridade-Ferreira described the deal as a “good move” for Raymond James in terms of clarifying its identity in the UK wealth management market.
She said: “No one is quite sure what it is – a platform or a wealth management firm with its own platform? This acquisition puts it firmly in the wealth management space and brings it a D2C opportunity at a time when D2C business is taking off.”
‘I expected a bigger player to swallow them’
Fairview Investing founder and consultant Ben Yearsley, who was head of investment research at Charles Stanley Direct between 2012 and 2015, described the acquisition as “inevitable” and one that had “been on the cards for five years or more”.
“Charles Stanley has lots of assets, and good presence but it hasn’t made the margins lots of similar companies have been making (in the biggest bull market in history), therefore at some point it was bound to get taken over.”
But Yearsley was surprised the acquirer ended up being Raymond James. “I expected a bigger more established UK player to swallow them,” he added.
Leverage respective strengths
Raymond James chief executive Paul Reilly said: “We have long respected and admired Charles Stanley and believe our proposal presents an extremely attractive opportunity to combine our respective UK wealth management operations.
“Raymond James will seek to leverage the respective strengths of Charles Stanley and Raymond James through further investment in technology, infrastructure and back office partnerships to enhance the firms’ already strong offering in wealth management.”
See also: Anthony Scott – ‘People who come to us don’t want to be pigeonholed’
Abberley said the Charles Stanley board believes the acquisition terms represent fair value and an attractive premium for shareholders. The board therefore intends to recommend unanimously that shareholders vote in favour of the acquisition.
He added: “Supported by the clear strategic rationale and intentions Raymond James has described today, I believe all stakeholders will benefit from the opportunities for growth arising from Charles Stanley becoming embedded within the Raymond James group.”
See also: Raymond James lets wealth manager partners join as employees while retaining investment autonomy
