Schroders Says It’s in Talks to Acquire Cazenove Capital
Schroders Plc (SDR), Europe’s biggest publicly traded money manager, said it’s in talks to buy Cazenove Capital Holdings Ltd., which has 18.7 billion pounds ($28.5 billion) of assets.
The firm may make a cash offer for Cazenove Capital with a loan note alternative, London-based Schroders said in a statement today. The talks do “not amount to a firm intention to make an offer,” Schroders said, without disclosing a price.
The combination of Schroders and Cazenove Capital would bring together two of the City of London’s oldest firms, which can both trace their histories back to the 19th century. Both companies sold their more famous investment-banking arms since the millennium -- Schroders’s to Salomon Smith Barney in 2000, which later became part of Citigroup Inc., and Cazenove started a joint venture with JPMorgan Chase & Co. (JPM) in 2005, and was later bought by the U.S. bank. Schroders and Cazenove Capital now solely focus on asset management.
“The potential Cazenove Capital acquisition accelerates Schroders’s bolt-on acquisition strategy,” Peter Lenardos, a London-based analyst at Royal Bank of Canada, wrote in a note to clients. The firm has 1.14 billion pounds of surplus capital earning minimal returns that can be used for “accretive” purchases, he said.
Schroders is looking to boost its assets under management after the announcement that Richard Buxton, head of U.K. equities and manager of its 3.5 billion-pound Alpha Plus fund, will leave to join Old Mutual Plc (OML) later this year. Buxton, who is taking colleague Errol Francis with him to Old Mutual, will run a fund following the same strategy at his new firm.
Schroders has until 5 p.m. on April 19 to make an offer for Cazenove Capital, which is owned by current and former employees, Lenardos said. Cazenove confirmed the discussions in a separate statement today.
Schroders climbed 0.6 percent to 2,093 pence a share in London trading.
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