UK investment consultancy and fiduciary manager P-Solve is to merge with equity boutique River & Mercantile (R&M) to form a new group that will look towards integrating specialist skills for product development.
P-Solve, previously a wholly owned subsidiary of UK consulting group Punter Southall, has joined forces with R&M as both look towards product development in their current areas of focus.
P-Solve chief executive Mike Faulkner will remain head of the new group, which will be known as R&M Group, with James Barham, current chief executive of R&M, continuing to run the equity management business in addition to becoming the group’s head of distribution.
The R&M Group will continue to offer P-Solve’s investment, and delegated, consultancy propositions, as well as the equity management business from R&M.
R&M said the merger would benefit both arms of the business, as it creates a natural extension from its equity specialism to other asset classes.
For P-Solve, the company said, the merger provides the opportunity to develop its asset allocation and derivative capabilities.
Faulkner told IPE that, with the demand for outcome-led solutions growing, the merger made sense given the two sets of skills.
“There is a logic to bringing together the skills, based on the trend to outcome orientation in investment markets,” he said.
“We can do this by bringing together the alpha and security selection skills [from R&M] and derivatives and asset allocation skills [from P-Solve], which help manage the downside of equity investing.”
Responding to concerns over potential conflicts of interest between the investment consultancy and investment management arms of the new group, Faulkner said managing potential conflicts would be akin to the ones the firm already comes up against.
“The conflict question is one of the things we have to be wary of, and one we have to address properly,” he said.
“We are not going to change the fiduciary proposition, which is something that finds a range of managers, and suddenly fill it up with internal products.
“That isn’t the rationale for what we’re doing.
“This is just like the normal conflicts of doing business. There are currently some clients that choose to engage us on a pure consultancy basis, sometimes on a fiduciary, and some in between, and all of those require different types of behavior.
“This is the same idea, and we have managing those sorts of issues forever.”
On the deal, James Barham said the merger would accelerate plans for R&M to develop a broad-based diversified business.
“We will have a strengthened platform from which to work and support our clients and consultants,” he said.