Released: 13 Jan 2006
Highlights
- Total funds under management increased by 23.4% over the 12 months to 31 December 2005 to £9.5 billion, including an increase of 46.5% in funds under management at Rathbone Unit Trusts to £1.2 billion.
- Acquisition of Dexia’s UK private banking business
consisting of:
- An investment management business (the former business of Ely Fund Managers) with total funds under investment management of just over £600 million as at 31 December 2005 for an amount up to a maximum of £14 million.
- UK private banking loan and deposit book being purchased at net book value.
- The acquisition is expected to be earnings-enhancing in 2007.
Introduction
Rathbone Brothers Plc (“Rathbones”) has agreed to
acquire the investment management and private banking business of
Dexia Banque Internationale à Luxembourg S.A., London Branch
(the “Business”). The consideration payable for the
Business, made up of initial and deferred amounts, will be a
maximum amount of £14 million and is ultimately dependent on
the value of the funds under management transferred. The UK
personal banking book - consisting of approximately £50
million in loans and £20 million of deposits (in addition to
uninvested capital balances from client portfolios of approximately
£30 million) - is being purchased at book value. All
consideration payments, including deferred payments, will be met
from Rathbones’ existing cash resources.
Mark Powell, chairman of Rathbones, commented:
“2005 was a year of further progress for Rathbones and demonstrates our ability to attract and retain client funds again resulting in strong funds under management numbers for the year. An increase in funds in our core discretionary investment management business of nearly 21% compares with increases in the FTSE APCIMS Balanced Index of 14.9% and of 16.7% in the FTSE 100 Index. The growth in unit trust funds was particularly pleasing and reflects excellent investment performance as well as energetic marketing.
“Added to this strong organic growth result, the acquisition
of Dexia’s UK private banking business is an excellent fit
with Rathbones’ existing discretionary investment management
activities and is consistent with our strategy for all acquisitions
and recruitments: the investment professionals joining us share our
belief in personalised discretionary investment management and we
are confident that the acquisition will be
earnings-enhancing.”
Description of the Business
The Business being acquired generated revenues of £5.77
million in the year ending 31 December 2004 and £2.9 million
in the first half of 2005. It made an estimated positive
contribution in 2004 of approximately £2.0 million and in the
first half of 2005 of approximately £0.9 million after
allocating client-facing front office and investment back office
staff direct costs but before Dexia’s central cost
allocations.
The Business being purchased consists of the former business of Ely
Fund Managers, which was originally acquired by the Dexia group in
2001 and which has been integrated with the personal banking
business of Dexia-BIL, London Branch.
As at 31 December 2005, the Business’ total funds under
investment management were just over £600 million, including
£326 million of private investor discretionary managed
accounts, £190 million of charity funds and pension accounts,
and a very successful managed pension fund and multi-manager
portfolios. The loan book being acquired predominantly consists of
secured loans to individuals and family groups.
The Business will include the investment managers responsible for
managing client accounts and separate agreements have been made
with key individuals to effect their move to Rathbones. It will
also include related investment support and operations staff.
Terms of the acquisition
The initial consideration for the investment management part of the
Business will consist of £10 million or £7 million
dependent on the final nature of the scheme implemented by the
Court (see below). The deferred consideration will also be a
variable element with maxima of £4 million and £7
million, respectively, depending on the total funds under
management which are eventually transferred to Rathbones.
The maximum total consideration for the investment management part
of the Business will therefore not exceed £14 million and the
deferred consideration period will be no longer than 13 months
after closing.
The Business will be transferred to Rathbone Investment Management
Limited by way of a Court order sanctioning a banking business
transfer scheme pursuant to Part VII of the Financial Services and
Markets Act 2000. The acquisition is subject to regulatory and
Court approval but it is expected that completion will take place
by the end of April 2006. Clients of the Business will be receiving
letters from Dexia BIL in the near future.
Reasons for and benefits of the acquisition
The Business will be integrated into Rathbone Investment Management
Limited which is responsible, within Rathbones, for the bespoke
management of £8.3 billion in discretionary investment
portfolios for individuals, their trusts, charities and pension
funds (as at 31 December 2005). Rathbone Investment Management
Limited also holds a banking licence.
The acquisition will expand Rathbones’ role as a manager of
investment portfolios for charities and increase its business in
the management of pension accounts for private individuals. In
addition, it is expected that economies of scale will be generated
for the discretionary managed portfolio being acquired through the
use of Rathbones’ operations platform. Overall, the
acquisition is expected to be earnings-enhancing in 2007.
Charles Good, managing director of Dexia Private Banking UK,
commented:
“Following Dexia’s decision to exit from private
banking activities in the UK, I am pleased to say that we have
found in Rathbones a good home for our business. Their culture is
right for us and they are at one with our belief in delivering the
best possible investment and banking services to clients, where we
believe there continue to be significant opportunities for
growth.”
- Ends -
Enquiries:
| Rathbone Brothers Plc | |
| Mark Powell, Chairman |
020 7399 0000 |
| Andy Pomfret, Chief Executive | |
| Emily Morris, Marketing Director | |
| Smithfield | |
| Reg Hoare/Katie Hunt |
020 7360 4900 |
Notes for editors:
Rathbones
Rathbone Brothers Plc specialises
in providing, through its subsidiaries, personalised investment
management and wealth management services for private clients and
trustees, including discretionary asset management, tax planning,
trust and company management, and banking services. It manages
£9.5 billion of funds, including £1.2 billion managed
by Rathbone Unit Trust Management Limited (as at 31 December
2005).
Dexia Private Banking UK
Dexia Private Banking UK is the product of the integration of the
personal banking activities of Dexia-BIL’s branch in London
and Ely Fund Managers, which was established in 1983 and acquired
by Dexia-BIL in 2001.
Ely Fund Managers acquired Pembroke Asset Management (a multi
manager operation) in 1995 and Independent Investment Management (a
charity fund management business) in 2000.
Dexia Banque Internationale à Luxembourg is one of the major
subsidiaries of the Dexia Group, one of the top-15 banking groups
in Europe. Founded in 1856, Dexia-BIL is specialised in private
banking, asset management and fund administration, and it operates
in several countries worldwide.