Standard Life’s Newton Purchase Unlikely to Fuel Flurry of DealsPeter Woodifield
Standard Life Plc doesn’t expect its purchase of Bank of New York Mellon Corp.’s British private client business to trigger a wave of mergers and acquisitions in the U.K. wealth management industry.
“We don’t see massive consolidation,” Richard Charnock, chief executive officer of Standard Life Wealth, said in a telephone interview today. “Opportunities like this will come up but there are not going to be lots of them. Our organic growth opportunities are unlimited.”
The unit of the Edinburgh-based life insurer agreed to buy the Newton Management Ltd. private client business, which has 3.6 billion pounds under management ($5.4 billion), for as much as 83.5 million pounds, it said in an e-mailed statement today.
Rathbone Brothers Plc, a U.K. wealth manager founded in 1742 that now has 18 billion pounds under management, is looking to buy private client businesses with between 200 million and 300 million pounds of assets, Chief Executive Officer Andy Pomfret said in an interview on Feb. 20. Larger acquisitions were much more complicated, he said.
Standard Life Wealth was set up in 2008 to cater to wealthy individuals. The acquisition will triple assets managed for clients to more than 5 billion pounds and allow it to offer an alternative, riskier investment strategy, Charnock said.
Its current strategy is based on the largest fund at Standard Life Investments, Edinburgh’s biggest manager of money. The 14.4 billion-pound Global Absolute Return Strategies Fund, which invests in a mix of stocks, bonds and currencies, has returned 45 percent over the past five years, according to data compiled by Bloomberg.
The Newton private client unit, which has about 3,000 customers and about 120 charities, has a so-called long-only investment strategy betting on rising markets, Charnock said.
“That is why it is entirely complementary” to what Standard Life Wealth does, he said. “This covers the majority of private client requirements, which is one of the attractions of this particular business.”
Standard Life Wealth had been talking to London-based Newton since about September or October, he said. The transaction is due to complete within seven months. All the 79 Newton employees in the private client unit will transfer to Standard Life.