News and Press

Investec moves to secure control of Rensburg

For Immediate Release

Consolidation in the fund management industry stepped up a notch on Tuesday as Investec agreed an offer to take full control of smaller rival Rensburg Sheppards, in a deal which values the equity of the latter at £412m.

South African-based Investec, which is listed in London and Johannesburg, will offer 1.63 new shares for every Rensburg share in a deal which values Rensburg shares at 916p, a 48 per cent premium to Monday’s closing price of 620p a share. The investment bank already owns 48 per cent of Rensburg.

Investec’s offer comes five years after it first took its stake in the private client broker, whose roots go back to the Liverpool Stock Exchange in 1873.

“Rensburg Sheppards has been a good investment for Investec over the past few years and the proposal we have announced today is the natural next step for both businesses,” said Stephen Koseff, chief executive of Investec.

Rensburg acquired Carr Sheppards Crosthwaite from Investec in 2005. In return, Investec took a 47.7 per cent stake in the newly formed Rensburg Sheppards. Employees hold a little over 5 per cent of the group.

The deal underlines Investec’s ambition to expand its non-lending revenue stream and the bank could eventually use Rensburg Sheppards as a platform from which to build a bigger wealth and asset management business.

Investec’s assets under management rose 50 per cent to £43.4bn in 2009, while net fund inflows exceeded £4.5bn.

The bank said earlier this month that its British, European and Australian businesses were expected to post a rise in full-year operating profits, while profit at its South African unit was expected to fall as defaults continued to rise.

Investec moved into the FTSE 100 last week. Since floating in the UK in 2002, the group’s shares have risen more than threefold in value.

Funds under management at Rensburg rose by a modest 1.5 per cent between the end of last September and the turn of the year, to £12.3bn.

Schroders Investment Management and BlackRock Investment Management, which hold stakes of 7.7 per cent and 2.9 per cent respectively, have signed letters of intent backing the deal. The deal is intended to be implemented via a scheme of arrangement.

Goldman Sachs advised Investec while Merrill Lynch acted as corporate broker. Fenchurch Advisory Partners was adviser and Numis Securities was corporate broker to Rensburg Sheppards.