Schroders is planning to acquire rival investment manager Cazenove Capital, subject to shareholder approval, for £424m.
The acquisition will bring together two of the UK’s biggest charity fund managers to create easily the UK’s largest in terms of funds under management. The two companies switched places for fifth and sixth spot in the Charity Finance Charity Fund Management Survey last year, with Schroders squeaking ahead of Cazenove to take fifth.
A decision on whether the two charity operations will continue to run separately or be brought together under a single brand and team, has not yet been made, according to Schroders.
Schroders had £3.185bn of charity funds under management at the end of June last year, while Cazenove had £3.057bn. Combining the two portfolios under one brand would see them easily leapfrog Sarasin, Newton, CCLA and BlackRock to take the top spot in the annual Charity Finance survey.
Schroders Charities has been managing investment assets for charity clients for more than 75 years and currently boasts over 330 clients in the sector. It has a charities team of 12.
Cazenove has a larger client base, with around 780 charity sector clients, as its minimum portfolio size is £1m while Schroders' is £5m.
At just under 20 per cent of its overall £17.2bn assets under management, Cazenove’s charities division is a much bigger slice of its overall business than Schroders’. Schroders’ overall funds under management, prior to this deal, amounted to £212bn, and its charities portfolio made up less than 5 per cent of that.
Future shape of charities operation still being decided
Schroders’ client director Tom Montagu-Pollock told civilsociety.co.uk that the details as to how the charity divisions would operate going forward were still being thrashed out. In the short-term, the two fund managers would continue to run independently but how it would play in the long-term is yet to be decided, he said.
The press release announcing the deal stated that the transaction would “create one of the UK market leaders in investment management services for charities”.
Andrew Ross (pictured), chief executive of Cazenove Capital, said in the statement: “In combining with Schroders, we will create a pre-eminent independent private banking and charities business in the UK, with a broader capability covering investment management, financial planning, deposit-taking and lending services.”
He went on: “Our charity and private clients will continue to be looked after by their existing teams whilst benefitting from a broader range of services and more extensive geographical investment expertise.
“For our investment funds business, this represents an opportunity to continue our distinctive business cycle investment process while benefitting from the support of Schroders’ extensive distribution capabilities.”
