SOUTH African bank Investec yesterday said it will stump up a hefty premium to acquire the remainder of Rensburg Sheppards, the fund manager in which it already holds a 47 per cent stake.
Investec, which merged its private-client stockbroking business Carr Sheppards Crosthwaite with Rensburg in 2005, will pay 1.63 new shares of its own for each Rensburg Sheppards share, valuing the company at around £412m based on Investec’s closing price of 562p on Monday.
Sources close to the deal said the arrangement, which has been fully recommended by both boards, came after lengthy negotiations between the two sides. The offer values Rensburg’s shares at 916p, a 48 per cent premium to its closing price of 620p on Monday.
Rensburg’s stock soared by 40 per cent on the London Stock Exchange yesterday, ending the day at a beefed-up 868p.
Christopher Clarke, chairman of Rensburg Sheppards, said: “The offer values Rensburg Sheppards at a significant premium to its current share price and the offer consideration is in the form of a more liquid FTSE 100 security. This combination is underpinned by a compelling fit.”
Investec managing director Bernard Kantor said the two firms already enjoyed a “strong and close” relationship which would be reinforced by the bank taking full ownership.
JP Morgan analyst Mervin Naidoo said the 48 per cent price premium seemed disproportionate at face value, but added: “Versus peers and considering a control premium as well as the medium-term uplift for the group, we do not believe the offer is excessive.”
Schroders and BlackRock, Rensburg’s two largest shareholders aside from Investec, have already signed letters of intent to approve the deal.
MALIK KARIM AND GRAHAM MARCHANT
ADVISERS in the City were licking their lips again yesterday at the announcement of another juicy M&A deal. Advising target company Rensburg Sheppards was Fenchurch Advisory Partners, which, along with other boutiques, has seen a boom in business over the course of the downturn as companies increasingly look to old-school, trust-driven advisory services.
Leading the team at Fenchurch are the firm’s founders Malik Karim (pictured) and Graham Marchant, who set up the business in 2004. Karim was a former managing director of Credit Suisse First Boston and a director of Kleinwort Benson, while Marchant was in the European financial institutions group at Deutsche Bank. The pair have since built up Fenchurch into a thriving advisory business, drafting in the likes of Sir Peter Middleton, the former chairman of Barclays, as a senior adviser.
On the opposite side, Investec engaged Goldman Sachs to advise on the acquisition of its stake in Rensburg Sheppards. Leading the team were managing directors Luigi Rizzo and Dirk Lievens, and executive director John Brennan.
Rensburg also used Numis Securities as its corporate broker and Hammonds as its legal adviser, while Bank of America Merrill Lynch was corporate broker to Investec.