RBC Boosts Efforts To Tap Wealthy With GBP963 Million BlueBay Buy
18 Oktober 2010 - 9:40AM
Dow Jones News
Royal Bank of Canada (RY) Monday said it has agreed to buy
fixed-income fund manager BlueBay Asset Management PLC's (BBAY.LN)
equity for GBP963 million, giving the Canadian bank more products
to push through its wealth management business.
The offer price of 485 pence per share is a 29.1% premium to
BlueBay's 375.70 pence closing price on Oct. 15, and BlueBay
shareholders will also receive a previously announced dividend of
7.5 pence per share, for a total consideration of 492.5 pence per
share. BlueBay directors with shares representing 20.5% of the
company's equity have already pledged to vote in favor of the
deal.
The transaction comes amid broader consolidation in the global
asset management industry, as independent managers look to tap
bigger partners' sales channels, and banks are either unloading or
beefing up their asset management arms, depending on how much
capital they have.
"This acquisition will further RBC's strategy to leverage our
position as a top 10 global wealth manager, and continue to expand
our asset management solutions for the benefit of our clients
around the world," George Lewis, group head of RBC Wealth
Management, said in a statement.
BlueBay Chief Executive Officer Hugh Willis said RBC's strength
and stability make it "an ideal partner."
BlueBay, with about $40 billion under management at Sept. 30,
floated on the London Stock Exchange in November 2006 with a
valuation of GBP571 million. At that time, it had $8 billion under
management, after having formed in 2001 with financial backing from
Barclays PLC (BCS) and Shinsei Bank Ltd. (8303.TO).
After several years of strong growth, its assets under
management contracted during the financial crisis from performance
losses at its funds and investor outflows. But in just 12 months
between Jan. 1, 2009 and Dec. 31, 2009, BlueBay's assets doubled
because of a strong rebound in credit markets.
Willis last month said the company expects to receive between $5
billion and $8 billion in net new money from investors in its 2011
fiscal year. The company runs long-only and hedge-fund fixed-income
strategies. At June 30, it managed about $18.3 billion in
investment-grade debt funds, $6.87 billion in high-yield and
distressed debt strategies and $6.6 billion in emerging
markets.
Meanwhile, RBC has been steadily building its U.K. business,
particularly in wealth management where it hopes to replicate its
success in Canada in winning business from ultra-wealthy private
investors.
At 0706 GMT, BlueBay shares were up nearly 31% at 491 pence.
-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451;
margot.patrick@dowjones.com
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