Rathbones merger with Investec Wealth ‘progressing well’ but outflows ‘elevated’
Rathbones said its landmark merger with Investec Wealth and Investment (IW&I) is “progressing well” with the pair to share an office from later this year, although outflows remain “elevated”.
“The integration of IW&I is progressing well with run-rate synergies now £10.6m, up from the £8m reported at 31 December 2023,” Paul Stockton, chief executive of the money manager, said.
“Work to combine the Group’s offices in locations where both Rathbones and IW&I have offices is also progressing well, with Birmingham, Cheltenham, Exeter, and Glasgow colleagues already working in combined premises and others, including our London head office, to follow during this year,” he continued.
Rathbones confirmed that its London-based employees will move to 30 Gresham Street, IW&I’s headquarters, later this year having found a new tenant for its Finsbury Circus offices.
The firm described this as “a key milestone in the integration process” achieved ahead of schedule.
Investec announced in April that its wealth and management division would combine with Rathbones in a £839m tie-up.
Investec will become a minority shareholder in the newly enlarged Rathbones Group, which will remain as an independent listed firm operating under the same brand.
UK fund managers suffered from heavy outflows last year as clients grappled with inflationary pressures and higher interest rates.
The update came as Rathbones updated investors on its performance in the first quarter of the financial year.
Funds under management and administration (FUMA) rose to £107.6bn at the end of the first quarter, up slightly from £105.3bn at the end of December. The firm noted that market movements added £2.8bn to its FUMA.
However, the money manager reported that outflows remained “elevated”, particularly from IW&I.
Outflows from Investec, totalling around £600m, were impacted by the “previously disclosed investment manager departures” and the withdrawal of funds from “low margin mandates”.
“Post-combination investment manager turnover continues to be low in both entities,” it said.
Rathbones continues to expect underlying operating margin for full year 2024 to be mid-20 per cent and to incur non-underlying costs in line with those stated at the year-end.
“While economic uncertainty and headwinds remain in the UK and abroad, Rathbones is well-equipped to navigate challenging market conditions. We remain confident in our integration and synergy targets and are well-positioned to take advantage of the future benefits of the Group’s scale,” Stockton said.