The boards of both Rathbones Group and Investec have announced that they have agreed to an all-share combination.

As a result, Rathbones and Investec Wealth & Investment will merge to create a UK-based discretionary wealth manager.

Under the terms of the agreement, new Rathbones shares will be issued in exchange for 100% of Investec W&I UK’s share capital.

In addition, the Rathbones Group will remain an independent premium-listed company operating under its brand. Investec will be a long term, strategic shareholder.

Also, the transaction includes wealth businesses in the UK and Channel Islands, but misses the Switzerland arm and Investec Wealth & Investment International.

Rathbones and Investec interests

Following completion, Investec Group will have an economic interest in Rathbones’ enlarged share capital of 41.25% with Investec Group’s voting rights limited to 29.9% of Rathbones’ enlarged total voting rights. Existing Rathbones shareholders will have an economic interest of 58.75% and voting rights of 70.1%.

Furthermore, the terms of the combination imply an equity value of approximately £839m for Investec W&I UK.

Clive Bannister, chair of Rathbones, said: “Bringing Rathbones together with Investec W&I UK will create the UK’s leading discretionary wealth manager with approximately £100 billion of funds under management and administration. This transaction not only presents a compelling strategic and financial rationale, but also accelerates Rathbones’ growth strategy.

“Operating at scale allows the group to offer an even more attractive proposition to clients and colleagues, supporting future growth and creating significant value for Rathbones’ shareholders. I look forward to Investec W&I UK colleagues joining the Enlarged Rathbones Group, and welcome Investec Group as a strategic shareholder. I am hugely excited about what the Combination can deliver.”

Fani Titi, Investec group chief executive officer, added: “The Combination of Investec W&I UK and Rathbones brings together two businesses which have a long-standing heritage in UK wealth management and closely aligned cultures. The strategic fit of the two businesses is compelling with complementary strengths and capabilities to enhance the overall proposition for clients. This will be supported by the strategic partnership which offers attractive growth and collaboration opportunities for both groups. The transaction represents a real step-change and long-term opportunity for our UK wealth strategy, underscores our commitment to the UK wealth management market and enhances our UK business as a whole.”