Schroders is poised to acquire River and Mercantile Group’s UK solutions division for some £230m (€273m), it was announced today.
As at the end of September, the fiduciary management and derivatives businesses had around £42bn of assets under management. The transaction, which is subject to River and Mercantile shareholders and regulatory approval, is expected to complete in the first quarter of 2022.
Schroders said the acquired division would “further strengthen its ability to meet the requirements of pension funds as they evolve”. The acquired business would retain its approach to strategic advice, investment process, integrated implementation and service model, it said.
James Barham, chief executive officer of River and Mercantile Group, will join Schroders to continue to lead the solutions division. Alex Hoctor-Duncan will succeed Barham as CEO of River and Mercantile following completion of the deal.
Peter Harrison, Schroders group CEO, said: “This acquisition further enhances our ability to meet the increasingly complex needs of pension fund clients and is consistent with our growth strategy.
“The business brings with it a well-respected team, with a strong track record of success and is a good cultural fit with Schroders. We see significant opportunities from this partnership.”
River and Mercantile said it planned to refocus as a specialist asset manager, creating and offering a broader range of high quality and value-added equity products, and in-demand alternatives and private market products.
Jonathan Dawson, chair of River and Mercantile, said the board felt the company’s share price undervalued the group and believed that the greatest value for shareholders could be unlocked through a formal sale process.
“The solutions business has grown strongly over the last five years and delivered excellent results through the recent Competition and Markets Authority (CMA) review compared with its peers,” Dawson said. “Investment performance has continued to be strong, the business was appointed by 12 new clients over the last year and the pipeline for future growth is very compelling.
“The board believes that the ability to deliver on this and future growth opportunities in an exciting and dynamic market will be enhanced by being part of Schroders and will benefit from the additional investment and scope that will come through this transaction.”
In July River and Mercantile said it had nearly 90% of fiduciary management assets since the beginning of retendering to comply with requirements following the CMA review into investment consulting and fiduciary management.