Rathbones tops up war-chest

published 7 November 2012

Wealth management outfit Rathbone Brothers is on the acquisition trail, snapping up the UK private client investment management business of Taylor Young Investment Management (TYIM).

TYIM's management team will soon be wearing Rathbone colours after the latter agreed to pay up to £10m in cash for the business, although the consideration could rise to £15m by November 2014 depending on the performance of funds currently being managed by TYIM. Rathbones expects the transaction to be earnings neutral in 2013 prior to amortisation, and should start contributing to earnings from 2014 onwards.

As at November 2nd, TYIM had £337m of funds under management (FUM), and Rathbones has calculated that adding those funds to its own pot would increase FUM by 2.0% to £17.69bn.

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Andy Pomfret, Chief Executive of Rathbone Brothers, said management expects to see more acquisition opportunities in the private client industry in the next few years, which explains why the company is raising around £24.2m (gross) through a placing of 2m shares. The targeted fund raising amount is equivalent to around 4.3% of Rathbones Brothers' market capitalisation, as at November 6th.

Canaccord Genuity has been appointed as sole book-runner for the placing, which means it will be in charge of haggling with institutional investors over the price of the share placing, which is not being underwritten.