TWO of the City’s most distinguished fund managers are joining forces in a deal that will see FTSE 100 firm Schroders shell out £424m for Cazenove Capital.
Schroders will pay Cazenove’s investors 135p per share to create a firm with combined private banking assets under management of £28.4bn.
While the firms expect to see £12m to £15m in pre-tax synergies per year following the tie-up, they have no plans to alter the service already given to clients.
“We are not looking for any cost synergies in the front office of our wealth management business or investment funds,” Michael Dobson, chief executive officer at Schroders, said on a conference call.
The deal, the largest in Schroders’ 200-year history, was announced just two weeks after its head of UK equities, Richard Buxton, announced that he was leaving the company to join Old Mutual.
Cazenove, which split from its investment bank in 2005 after a tie-up with JP Morgan, said Schroders shares its culture and long-term investment approach.
Its shareholders, who are primarily current and former employees, will also receive a 4.75p per share dividend as part of the deal.
SCHRODERS’ BID FOR CAZENOVE
Schroders is taking financial advice from boutique firm Gleacher Shacklock during its bid for Cazenove, while Slaughter and May is advising on the legal aspects.
The Gleacher team is led by director Edmund Dilger and partner Richard Slimmon. Both joined the firm last year – Dilger from Lazard and Slimmon from Deutsche Bank – after decades of experience in financial sector M&A.
London-based Gleacher Shacklock, founded in 2003 by former Dresdner deputy chairman Timothy Shacklock, specialises in corporate mergers.
Slaughters has put up a team led by corporate and commercial partners Gavin Brown, Oliver Wareham and Paul Dickson.
Cazenove is using Evercore as its financial adviser during the deal. Charles Outhwaite, Ollie Clayton and Neil Bhadra are leading the team.
Outhwaite is a London-based senior adviser at US investment bank Evercore, with over 20 years of corporate finance experience and a focus on asset managers. He began his investment banking career at Schroders.
Managing director Clayton is also a Schroders alumni, spending time in its financial institutions group before joining Lexicon Partners, which was bought by Evercore in 2011.
Bhadra, managing director of Evercore’s corporate advisory business, worked for Rothschild before moving to Lexicon. He holds a first class degree in mathematics and astrophysics from Cambridge University.
Cazenove, set up in 1823 by Huguenot immigrants, is one of the oldest and most illustrious stockbrokers in London.
The Big Bang of the 1980s saw Cazenove, which now manages £18.7bn, survive the swallowing up of traditional broking firms by German, US and Swiss banks.
Cazenove Capital went its own way after JP Morgan formed a joint venture with the wider group’s investment bank and stockbroking arm in 2005.
The departure of Bernard Cazenove in 2004, who headed the firm’s fund management division, ended an unbroken line of Cazenoves working at the firm since its establishment.
Cazenove Capital acquired private wealth management company Thornhill Holdings in 2010.
By Amy-Jo Crowley