17th Oct 2014 06:33
LONDON (Alliance News) - Old Mutual PLC Friday said its wealth division is acquiring Quilter Cheviot, which is known for serving the affluent and high-net-worth segments of the UK private client market, for up to GBP585 million, in a move to bolster its own discretionary investment management capabilities.
In a statement, Old Mutual said the acquisition comes comes under the wealth division's strategy of accelerating its development of a top retail investment business.
Old Mutual expects the deal to meet the group's return on equity target of 12% to 15% and generate annual group synergies of GBP15 million by 2017.
According to Old Mutual, Quilter Cheviot had GBP16.2 billion of funds under management at the end of September, as well as 38,000 clients. It boasts operating margins of 29% and revenue margins of 85-90 basis points, Old Mutual said.
Chief Executive Julian Roberts said Old Mutual has made "considerable progress" in executing its strategy this year.
"The acquisition of Quilter Cheviot delivers the final substantive part of our investment programme in the UK toward building a vertically integrated wealth management business of scale in the UK. Quilter Cheviot is a high quality franchise with excellent management, which delivers strong investment performance for its clients," Roberts said in a statement.
The acquisition is being funded from part of the proceeds of a series of business disposals in Europe and the initial public offering of the holding company of its US-based institutional asset management business. It follows on from Old Mutual's acquisition of acquisition of Intrinsic Financial Services Ltd, a UK network of financial advisers, earlier this year.
Quilter Cheviot Chief Executive Martin Baines said: "Old Mutual Wealth has a very strong distribution network through which we will be able to promote our discretionary investment management services and we will get greater access to the market leading asset management capability within Old Mutual Global Investors."
Old Mutual said that its wealth division remains on target to make a GBP270 million operating pretax profit from continuing operations in 2015, excluding Quilter Cheviot.
Under the terms of the acquisition, Old Mutual will pay up to GBP585 million at completion. According to Old Mutual, this will include about GBP42 million of equity which will be deferred and contingent on the performance of the business. The acquisition will give rise to goodwill of GBP489 million.
Bank of America Merrill Lynch, Pakenham Partners and Rothschild are acting as financial advisers to Old Mutual and Bank of America Merrill Lynch is acting as corporate broker to Old Mutual on the deal.
By Samuel Agini; [email protected]; @samuelagini
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