Investec in deal to buy Evolution for $452m

Investec is seeking to gain access to Evolution's wealth management unit, Williams de Broe. Photo / Thinkstock

Investec, a private bank and wealth manager with operations in the UK and South Africa, has agreed to buy Evolution Group in a transaction valuing the British stockbroker at £233.2 million ($452.6 million).

Evolution shareholders will receive about 53.8 million new Investec shares, the London-based company said.

"The transaction strengthens our position in the UK, giving us greater scale in both private client wealth management and investment banking," said Stephen Koseff, chief executive officer of Investec.

Investec said on August 4 that it was in talks to buy Evolution in an all-stock transaction. Investec is seeking to gain access to Evolution's wealth management unit, Williams de Broe, whose assets rose by 7 per cent to €6.2 billion ($10.3 billion) in the past year.

London-based Evolution also runs a fixed-income sales and trading platform, unlike most of its UK rivals, which target equities.

The offer equates to a value of 100.24p per Evolution share. Evolution fell 1.6 per cent to 92.5p in London trading while Investec fell 3 per cent to 414.6p.

"The deal builds incremental funds under management in the area which we believe is most under-appreciated and hence most undervalued at Investec," said Numis Securities analysts.

"We expect this to change in time as the market gives more valuation benefit to what is now a large asset management business."

Numis is keeping its "buy" recommendation on Investec.

Evolution chief executive Alex Snow will become the executive chairman of Investec's UK investment banking division, while David Currie will continue as head of Investec's British investment banking unit.

Investec also said it aimed to shed staff at the investment banking unit to "avoid unnecessary overlap with its existing activities".

The Investec offer is conditional on regulatory conditions and a document will be posted to Evolution shareholders followed by a general meeting in November.

- BLOOMBERG