Five weeks for Hoare Govett to learn its fate

David Hellier
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HOARE Govett, the stockbroker being sold by the beleaguered RBS bank, has already lost two blue chip clients in GlaxoSmithKline and Amlin as clients fret over its fate, so it is comforting to learn that it might know its new home in around five weeks time.

Of course, in an ideal world, its future would be clarified in days. The sales memorandum was despatched recently and possible bidders have all indicated their interest. But it’s probably a more complicated transaction to complete than most.

The entire Hoare Govett business comprises of around 1,000 people but it seems unlikely that any bidder will want to take the entire unit.

Oriel Securities, Liberum and possibly Numis, all small, independent houses, have registered an interest for the corporate broking business and its name. But it is unlikely that they would wish to take on more than 50 or so people, which leaves many more businesses to be sold or shut down inside Hoare Govett or the bank’s investment arm as a whole.

Many say the Hoare Govett name itself has substantial value but this seems difficult to believe. Other great City names, like James Capel, Phillips & Drew and even Warburg, have disappeared without too great a demand to bring them out of retirement.

It now looks as if a group of dealmakers at RBS, including its head of corporate finance, might also be looking at a management buyout of the RBS corporate finance business (which is outside Hoare Govett).

Shrinking the RBS investment banking business is looking anything but straightforward, giving Lazard, the bank’s adviser, a major headache.

Employees at Liberum, who are predominantly also shareholders, have just been notified of their winter bonuses. They were roughly a third down on the June bonus, but they received them nonetheless, which is something in these markets.

The Liberum board meets today to discuss the latest results, showing earnings up eight per cent. The mood is said to be reasonably upbeat.

It was probably a good thing for Investec that the bank was yesterday working on one of the first major UK takeovers of the year, advising Robert Wiseman, the dairy group, on its takeover by Müller Group.

The announcement of the deal coincided with the Evolution employees (who survived the recent merger between their firm and Investec) joining their new colleagues. “I guess it made it look as if we’re generally very busy,” said one insider. “Wiseman has been a client of Investec’s Keith Anderson for 17 years,” he added. Would the new Evolution colleagues be supporting the deal? No, he said.