Schroders has agreed a £424m deal to acquire Cazenove Capital.
The move will increase Schroders’ assets in both the private banking and UK intermediary space and brings its total assets under management up from £212bn to £229.2bn. The deal is subject to shareholder and regulatory approval.
The acquisition will cost Schroders £395m, with the asset manager setting aside a further £29m for future costs of existing deferred share compensation arrangements for Cazenove Capital employees.
Schroders has confirmed it intends to continue using the Cazenove brand within its private banking unit.
Cazenove, which has £5.1bn of assets within its investment funds business, has confirmed all fund managers will join Schroders as part of the deal.
Cazenove’s team includes the £1.2bn Cazenove UK Opportunities manager Julie Dean, £406m Cazenove UK Smaller Companies manager Paul Marriage and the £219m Cazenove UK Equity Income manager Matthew Hudson.
It also has a respected multi-manager team comprising Marcus Brookes, Robin McDonald and Joe Le Jehan, while Chris Rice heads the firm’s highly regarded European equity funds.
Schroders has been in the market for a UK equity team ahead of the pending departure of head of equities Richard Buxton to Old Mutual Global Investors in June. Buxton manages the flagship £3.6bn Schroder UK Alpha Plus fund.
Fellow UK fund managers Errol Franis and Ed Meier, who co-manage the £648m Schroder UK Equity fund, have also quit to join OMGI.
Schroders says the acquisition will provide economies of scale, principally in UK funds distribution and infrastructure, which the asset manager expects will enable it to achieve pre-tax cost synergies of between £12m and £15m annually.
Schroder chief executive Michael Dobson says: “This transaction creates a leading, independent private banking and wealth management business in the UK, and brings additional investment talent in complementary strategies across UK and European equities, multi-manager and fixed income to asset management.”