SCHRODERS is in talks to snap up smaller rival Cazenove Capital, raising the prospect of a merger of two of the Square Mile’s oldest blue-chip fund management names.
In a move that took the market by surprise, Schroders confirmed in a London Stock Exchange statement yesterday. that it is weighing a cash offer for Cazenove Capital, which manages £18.7 billion in assets.
There would be a loan note alternative, and talks between the parties have begun, with long-standing Schroders’ chief executive Michael Dobson taking a leading role.
The plan comes just a week after Schroders’ high-profile head of UK equities, Richard Buxton, resigned, raising the possibility private investors in his fund might follow him when he leaves in June.
Analysts said that buying its smaller rival would boost Schroders’ existing £212 billion of funds under management by 10 per cent. Under City Takeover Panel rules, the group now has to decide by 19 April whether to bid.
One analyst said: “It is a logical move by Schroders, more bolt-on then strategic if a deal comes off, but still a very useful addition of funds. They also managed to keep it pretty quiet, it was not on the City’s radar.”
Last month the suitor revealed that it had seen strong inflows in its fourth trading quarter. The City was wrongfooted by the potential deal because traditionally Schroders has been one of the least acquisitive of the bigger asset managers, preferring internally-generated growth.
However, the group has made bolt-on purchases recently, including American-based STW Fixed Income Management.
Cazenove, set up in 1823, became one of the most blue-chip London stockbrokers, whose clients were said to include the current Royal Family.
Cazenove Capital split from the wider business after American financial giant JP Morgan formed a joint venture with Cazenove’s investment banking and stockbroking business in 2005.