Finance: Brokers set for takeover battle

Charity sector investment management firms are involved in a spate of acquisition and merger plans.

North of England-based Rensburg has agreed the terms of a proposed merger with Carr Sheppards Crosthwaite, the joint manager of the Charities Property Fund.

But rival firm Rathbones made a "preconditional" offer for Rensburg on 14 January, which is dependent on the merger not proceeding.

Rensburg made the merger offer to Investec, the owner of Carr Sheppards, in December, offering to pay £5 per share. Under the plans Investec would retain a 64 per cent stake in the newly merged firm.

But Rathbones, which has more than 400 charity clients with £500m under management, has offered £135m at £6.10 per share for Rensburg. Rensburg's board has rejected the offer as "opportunistic and inadequate", but leading institutional shareholders in the company are urging them to reconsider.

Rathbones has requested access to information Rensburg gave to Investec as part of the merger plans.

Both Rensburg and Rathbones have a strong presence in the North and Scotland.

If the acquisition proceeds, the new firm could dominate the charity investment market in the region.

But a spokeswoman for Rathbones said that while both firms had historic ties to the North West, any new firm would be national in scope.

John Hildebrand, head of charities at Investec, said the battles between Rensburg and Carr Sheppards could signal a trend towards a reduction in the number of middle-range firms serving charities. "The industry is consolidating around boutique and larger investment houses that aim to offer a full range of products," he said. "With more than 50 players, it is likely that consolidation will be a theme in the sector."

In 2004, Chiswell Associates, which invested £990m on behalf of charities, was bought by Sarasin Investment Management, while Laing & Cruickshank, with £750m of charitable money under management, was swallowed up by UBS and Credit Lyonnais.

KEY POINTS

- Rensburg agrees merger terms with Carr Sheppards Crosthwaite

- Rathbones makes offer for Rensburg which is dependent on the Carr Sheppards merger not going ahead. Rensburg's board rejects the offer, but shareholders push for change of mind

- More mergers and acquisitions expected in charity sector investment management firms.

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