Investec eyes wealth assets of Evolution

INVESTEC aims to significantly strengthen its assets under management through its bid for wealth manager and broker Evolution Group, it said yesterday.

The South African banking group, which manages about £12bn of assets, made an early stage bid last week for Evolution, which holds £6bn through its Williams de Broe wealth management arm and has set a goal of growing that to £10bn.

Evolution’s broking arm does not expect to make a profit this year, leading to speculation that Investec may hive off Evolution Securities and keep only the wealth manager.

Peel Hunt analyst Henry Biddle calculated that Williams De Broe accounts for the bulk of Evolution’s £200m sum-of-the-parts valuation – about £130m – whereas Evolution Securities was worth just £19m. There’s a further £40-50m of cash.

Investec’s managing director Bernard Kantor yesterday told City A.M. high-level talks were already under way with Evolution’s board and the acquisition would strengthen both Investec’s asset management and investment banking businesses.

“I just think this deal makes common sense,” he said. “In this day and age you need to be able to get the maximum out of all areas of opportunity and this is one way of achieving those synergies and get more ammunition, more armaments, to take on the market.”

Kantor said its bid was focused on both parts of the group but said the broking industry was having a difficult time. “It is a tough area for most,” he said. “But I think they are strong, and we are ok, and together we will be even stronger.”

Earlier, Evolution had said it was in advanced talks to buy BNP Paribas’ private client business, part of its wealth management arm.