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LONDON BRIEFING: Rathbone to merge with Investec's UK wealth arm

4th Apr 2023 07:52

(Alliance News) - Stocks in London were called to open higher on Tuesday, after the Reserve Bank of Australia decided to pause interest rate hikes, while Rathbones and Investec agreed a combination to create a UK wealth manager with GBP100 billion in assets.

The Reserve Bank of Australia decided to leave interest rates unchanged at its April meeting. The cash rate target remains 3.60% and the interest rate on exchange settlement balances remains 3.50%. The RBA noted the decision follows a cumulative 3.5 percentage point increase to interest rates since May last year.

Market consensus, as cited by FXStreet, had been expected the move, though some analysts had believed a 25 basis point hike was possible.

"The board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook," said RBA Governor Philip Lowe.

Lowe went on to say that the bank expects some further tightening of monetary policy "may well be needed" to return inflation to its 2% to 3% target range.

In early company news on Tuesday, travel and insurance firm Saga swung to a profit in financial 2023. Rathbones Group will merge with Investec's Wealth & Investment arm in an all-share deal.

Here is what you need to know at the London market open:




FTSE 100: called up 0.3% at 7,694.01


Hang Seng: down 0.7% at 20,272.53

Nikkei 225: closed up 0.4% at 28,287.42

S&P/ASX 200: closed up 0.2% at 7,236.00


DJIA: closed up 327.00 points, or 1.0%, at 33,601.15

S&P 500: closed up 15.20 points, or 0.4%, at 4,124.51

Nasdaq Composite: closed down 32.45 points, 0.3%, to 12,189.45


EUR: up at USD1.0897 (USD1.0883)

GBP: up at USD1.2409 (USD1.2386)

USD: up at JPY132.73 (JPY132.32)

Gold: down at USD1,978.31 per ounce (USD1,988.83)

(Brent): up at USD85.26 a barrel (USD84.52)

(changes since previous London equities close)




Tuesday's key economic events still to come:

11:00 CEST EU producer price index

10:15 BST UK BoE member Silvana Tenreyro delivers SES Economic Policy lecture

08:55 EDT US Johnson Redbook retail sales index

10:00 EDT US labor turnover survey

10:00 EDT US IBD/TIPP economic optimism index

13:30 EDT US Fed Boston President Susan Collins and Fed Governor Lisa Cook speak

16:30 EDT US API weekly statistical bulletin

18:45 EDT US Fed Cleveland President Loretta Mester speaks


US President Joe Biden on Monday shrugged off a sharp output cut by Saudi-led OPEC+ oil producers, while the White House criticized the move but said it would be of limited impact on the US economy. "It's not going to be as bad as you think," Biden told reporters while travelling in Minnesota to promote his economic record. White House National Security Council spokesman John Kirby told reporters "we don't think that production cuts are advisable at this moment, given market uncertainty." The US "made that clear", he said, but added: "We're focused on moving ahead here." A group of OPEC+ countries, led by long-time close US ally Saudi Arabia, announced a surprise cut of one million barrels a day in a bid to boost prices.




JPMorgan raises Auto Trader to 'neutral' (underweight) - price target 630 (550) pence


Jefferies starts Renishaw with 'underperform' - price target 3,270 pence


Jefferies cuts Petrofac to 'hold' (buy) - price target 70 (160) pence




Anglo-Australian mining and metals company Rio Tinto said it will support Energy Resources of Australia's plans to raise up to AUD369 million to address funding requirements for the Ranger Rehabilitation project in Australia's Northern Territory to the end of the second quarter of 2024. Rio Tinto, which owns 86.3% of ERA's shares, has pre-committed to subscribe for its full entitlements under the offer, at a cost of AUD319 million. Kellie Parker, Rio Tinto's chief executive for Australia, said: "We are committed to ensuring the critical rehabilitation of Ranger is completed to a standard that will establish an environment similar to the adjacent Kakadu National Park."




Digital 9 Infrastructure said it continues to monitor its current share price volatility. The London-based investor in digital infrastructure confirmed that it is not aware of any portfolio specific factors that have led to the recent decline in the share price. The company added that it believes that the discount to net asset value at which the company's share price currently trades materially undervalues Digital 9. "The board maintains confidence in the group's diversified portfolio of nine high-quality data centre, subsea fibre, wireless and terrestrial fibre assets which continue to perform strongly, in line with management expectations," Digital 9 said.


Rathbones Group and Investec have agreed to an all-share combination of Rathbones with Investec Wealth & Investment to "create the UK's leading discretionary wealth manager". The combination brings together the two wealth management businesses. Under the terms of the combination, new Rathbones voting and non-voting shares will be issued in exchange for 100% of Investec W&I UK's share capital. Investec will have a 41.25% economic interest in Rathbones, but no more than 29.9% of the voting rights. The enlarged Rathbones Group will remain an independent premium-listed company in London, operating under the Rathbones brand with Investec as a long-term, strategic shareholder. "The boards of Rathbones and Investec Group believe that the combination will unlock significant scale benefits through the creation of the UK's leading discretionary wealth manager with approximately GBP100 billion of funds under management and administration," Rathbones said. The enlarged company will continue to be led by Rathbones Chair Clive Bannister and CEO Paul Stockton. It is targetting annual run-rate cash synergies of at least GBP60 million from the combination.




WANdisco said it has signed two contract renewals with "major global organizations". Both renewals cover usage of WANdisco SVN MultiSite. SVN MultiSite is the company's source code management software solution that delivers active-active replication and LAN-speed performance over wide area networks. The company said that BMW has signed a multi-year license agreement, whilst Maxim Integrated has agreed a five-year subscription license renewal with WANdisco. Taken together, these two contract renewals are expected to deliver USD 1.5 million in revenue to WANdisco over the next five years, it said.


Saga said revenue in the financial year that ended January 31 grew by 54% to GBP581.1 million from GBP377.2 million the year b efore. The Kent-based over-50s travel operator swung to a pretax profit of GBP21.5 million, from a loss of GBP6.7 million. Saga declared no dividend for the financial year, unchanged year-on-year. Looking ahead, the company said the progress made in the last year puts it in "good stead" as it enters financial 2023. "I am pleased to report that last year the performance of our core Cruise, Travel and Insurance businesses enabled us to return to underlying profitability whilst we also made good progress in relation to the strategy we set out 12 months ago," said Chair Roger De Haan.


By Sophie Rose, Alliance News reporter

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