Financial News

  • 24 October 2012, 8:52

Major Wealth Firms In Merger Talks

Two of the private wealth management industry's most prominent names are to be combined in a merger facilitated by Bridgepoint, the private equity group.

I have learned that Quilter & Co is in advanced talks to acquire Cheviot Asset Management, which has approximately 4bn under management.

Bridgepoint, which will fund the deal, plans to combine Cheviot with Quilter, which it bought earlier this year and is about twice Cheviot's size by assets under management.

The merged company, which is expected to be known as Quilter Cheviot, will become the second-largest independent private client management firm in the City.

With approximately 12bn of client assets and around 34,000 clients, it will rank behind only Brewin Dolphin by size.

The deal has not yet been formally signed, although an announcement is understood to be scheduled for early next month, according to people close to the talks.

Both sides are, though, said to be enthusiastic about a merger, given the additional scale it will create.

"Culturally and geographically, this transaction is as good a fit as you will find in private client management," a source close to the deal said.

Between them, Cheviot and Quilter manage funds for some of the wealthiest individuals in Britain, as well as charities and trusts, pension funds, corporate bodies and friendly societies.

The average client of the two firms is understood to have up to 500,000 in assets for investment.

The price that Bridgepoint is paying for Cheviot is unclear, although it is understood to be less than 100m.

Cheviot was launched in 2006 by Michael Kerr-Dineen, former chief executive of UBS Laing & Cruickshank, the private wealth manager owned by Swiss investment bank UBS and one of the sector's most respected executives.

Chaired by Sir George Mathewson, the former chairman and chief executive of Royal Bank of Scotland, Cheviot is part-owned by Toscafund, the investment firm.

Cheviot's partners will become partners in the enlarged firm following the deal, while Martin Baines, Quilter's chief executive, will run it.

Mr Kerr-Dineen, the Cheviot chief executive, is understood to have agreed to become an adviser to Bridgepoint and the merged company's board for three years following the deal.

Bridgepoint acquired Quilter's UK business from Morgan Stanley, the Wall Street bank, in a deal valuing it at about 180m.

It was the second time that Morgan Stanley had sold the business, having previously offloaded it to Citigroup in 2006.

People involved in the new deal said the combined Quilter Cheviot would also seek further deals as ownership of the private wealth management sector continues to shift, triggered partly by the enforced disposal of assets by major banking groups.

Bridgepoint and Cheviot declined to comment.