UPDATE: RBC Aims To Tap Wealthy With GBP963 Million BlueBay Buy
18 Oktober 2010 - 10:46AM
Dow Jones News
Shares in fixed-income fund manager BlueBay Asset Management PLC
(BBAY.LN) soared 30% Monday after Royal Bank of Canada (RY) agreed
to buy it 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 Friday, 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.
At 0800 GMT, the stock was up 113 pence, or 30%, at 489 pence.
Analysts said the offer is a full valuation, at about 19 times
price to expected fiscal 2011 earnings, and that they don't expect
another suitor to emerge.
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. Last week, Europe's largest hedge-fund group,
Man Group PLC (EMG.LN) completed a $1.8 billion purchase of smaller
rival GLG Partners Inc.
"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 in
long-only and hedge-fund fixed-income strategies, 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).
Co-founders Willis and chief investment officer Mark Poole have
agreed to reinvest 25% of the cash they receive from RBC for their
shares into BlueBay funds. If they leave within three years,
they'll forfeit 40% of those investments.
"BlueBay is a highly attractive asset which, based on this
morning's update, is trading well and delivering as expected. In
our view, the offer price looks attractive but this must be put in
context of 43% earnings growth forecast in 2011, followed by 26% in
2012," KBC Peel Hunt analyst Stuart Duncan said in a note, keeping
a buy rating on the stock.
After several years of strong growth, BlueBay's 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.
In a trading update also released Monday, BlueBay said assets
rose to $40 billion from $34.3 billion at June 30, because of net
investor subscriptions of around $1.2 billion, positive fund
performance of $1.5 billion and favorable effects of converting
euro-denominated funds into dollars of $3 billion.
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, and Monday said BlueBay continues to be optimistic
about its prospects this year.
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.
-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451;
margot.patrick@dowjones.com
Shinsei Bk Sp Adr (PK) (USOTC:SKLKY)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Shinsei Bk Sp Adr (PK) (USOTC:SKLKY)
Historical Stock Chart
Von Jul 2023 bis Jul 2024