13th Jan 2006 07:01
Rathbone Brothers PLC13 January 2006 13 January 2005 Rathbone Brothers Plc 23.4% increase in funds under management and acquisition of Dexia's UK private banking business Highlights • Total funds under management increased by 23.4% over the 12 months to 31 December 2005 to £9.5 billion, including an increase of 46.5% in funds under management at Rathbone Unit Trusts to £1.2 billion. • Acquisition of Dexia's UK private banking business consisting of: • An investment management business (the former business of Ely Fund Managers) with total funds under investment management of just over £600 million as at 31 December 2005 for an amount up to a maximum of £14 million. • UK private banking loan and deposit book being purchased at net book value. • The acquisition is expected to be earnings-enhancing in 2007. Introduction Rathbone Brothers Plc ("Rathbones") has agreed to acquire the investmentmanagement and private banking business of Dexia Banque Internationale aLuxembourg S.A., London Branch (the "Business"). The consideration payable forthe Business, made up of initial and deferred amounts, will be a maximum amountof £14 million and is ultimately dependent on the value of the funds undermanagement transferred. The UK personal banking book - consisting ofapproximately £50 million in loans and £20 million of deposits (in addition touninvested capital balances from client portfolios of approximately £30 million)- is being purchased at book value. All consideration payments, includingdeferred payments, will be met from Rathbones' existing cash resources. Mark Powell, chairman of Rathbones, commented: "2005 was a year of further progress for Rathbones and demonstrates our abilityto attract and retain client funds again resulting in strong funds undermanagement numbers for the year. An increase in funds in our core discretionaryinvestment management business of nearly 21% compares with increases in the FTSEAPCIMS Balanced Index of 14.9% and of 16.7% in the FTSE 100 Index. The growthin unit trust funds was particularly pleasing and reflects excellent investmentperformance as well as energetic marketing. "Added to this strong organic growth result, the acquisition of Dexia's UKprivate banking business is an excellent fit with Rathbones' existingdiscretionary investment management activities and is consistent with ourstrategy for all acquisitions and recruitments: the investment professionalsjoining us share our belief in personalised discretionary investment managementand we are confident that the acquisition will be earnings-enhancing." Description of the Business The Business being acquired generated revenues of £5.77 million in the yearending 31 December 2004 and £2.9 million in the first half of 2005. It made anestimated positive contribution in 2004 of approximately £2.0 million and in thefirst half of 2005 of approximately £0.9 million after allocating client-facingfront office and investment back office staff direct costs but before Dexia'scentral cost allocations. The Business being purchased consists of the former business of Ely FundManagers, which was originally acquired by the Dexia group in 2001 and which hasbeen integrated with the personal banking business of Dexia-BIL, London Branch. As at 31 December 2005, the Business' total funds under investment managementwere just over £600 million, including £326 million of private investordiscretionary managed accounts, £190 million of charity funds and pensionaccounts, and a very successful managed pension fund and multi-managerportfolios. The loan book being acquired predominantly consists of secured loansto individuals and family groups. The Business will include the investment managers responsible for managingclient accounts and separate agreements have been made with key individuals toeffect their move to Rathbones. It will also include related investment supportand operations staff. Terms of the acquisition The initial consideration for the investment management part of the Businesswill consist of £10 million or £7 million dependent on the final nature of thescheme implemented by the Court (see below). The deferred consideration willalso be a variable element with maxima of £4 million and £7 million,respectively, depending on the total funds under management which are eventuallytransferred to Rathbones. The maximum total consideration for the investment management part of theBusiness will therefore not exceed £14 million and the deferred considerationperiod will be no longer than 13 months after closing. The Business will be transferred to Rathbone Investment Management Limited byway of a Court order sanctioning a banking business transfer scheme pursuant toPart VII of the Financial Services and Markets Act 2000. The acquisition issubject to regulatory and Court approval but it is expected that completion willtake place by the end of April 2006. Clients of the Business will be receivingletters from Dexia BIL in the near future. Reasons for and benefits of the acquisition The Business will be integrated into Rathbone Investment Management Limitedwhich is responsible, within Rathbones, for the bespoke management of £8.3billion in discretionary investment portfolios for individuals, their trusts,charities and pension funds (as at 31 December 2005). Rathbone InvestmentManagement Limited also holds a banking licence. The acquisition will expand Rathbones' role as a manager of investmentportfolios for charities and increase its business in the management of pensionaccounts for private individuals. In addition, it is expected that economies ofscale will be generated for the discretionary managed portfolio being acquiredthrough the use of Rathbones' operations platform. Overall, the acquisition isexpected to be earnings-enhancing in 2007. Charles Good, managing director of Dexia Private Banking UK, commented: "Following Dexia's decision to exit from private banking activities in the UK, Iam pleased to say that we have found in Rathbones a good home for our business.Their culture is right for us and they are at one with our belief in deliveringthe best possible investment and banking services to clients, where we believethere continue to be significant opportunities for growth." Ends Enquiries: Rathbone Brothers Plc www.rathbones.comMark Powell, Chairman 020 7399 0000Andy Pomfret, Chief ExecutiveEmily Morris, Marketing Director Smithfield Reg Hoare/Katie Hunt 020 7360 4900 Notes for editors: Rathbones Rathbone Brothers Plc specialises in providing, through its subsidiaries,personalised investment management and wealth management services for privateclients and trustees, including discretionary asset management, tax planning,trust and company management, and banking services. It manages £9.5 billion offunds, including £1.2 billion managed by Rathbone Unit Trust Management Limited(as at 31 December 2005). Dexia Private Banking UK Dexia Private Banking UK is the product of the integration of the personalbanking activities of Dexia-BIL's branch in London and Ely Fund Managers, whichwas established in 1983 and acquired by Dexia-BIL in 2001. Ely Fund Managers acquired Pembroke Asset Management (a multi manager operation)in 1995 and Independent Investment Management (a charity fund managementbusiness) in 2000. Dexia Banque Internationale a Luxembourg is one of the major subsidiaries of theDexia Group, one of the top-15 banking groups in Europe. Founded in 1856,Dexia-BIL is specialised in private banking, asset management and fundadministration, and it operates in several countries worldwide. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Rathbone