Standard Life has underlined its transition from insurer to asset manager by scooping up Newton's £3.6 billion private client business in a deal that more than trebles the size of Standard Life Wealth and puts it among the UK market leaders.
The deal was welcomed in Edinburgh as a strong positive for the Scottish financial sector.
SLW will pay up to £83.5 million after winning the auction announced last December by Newton, the investment manager founded in 1978 by former Edinburgh fund manager Stewart Newton but bought 20 years later by Mellon Corporation, itself bought by Bank of New York in 2007. London-based Newton manages £50bn in total, under £1bn of it from Edinburgh.
Standard said the price would ultimately depend on the value of assets retained, as well as transferred, and the deal should enhance earnings in the first full year.
The group, under chief executive David Nish, has been emphasising its reinvention as a fee-based asset gatherer, helped by generally strong investment performance. It said: "This accelerates Standard Life's ambitions in the retail investment market, while balancing the strength of Standard Life Investments in the institutional and wholesale markets, and supporting further growth in fee-based business."
Gareth Howlett, at wealth manager Brooks Macdonald in Edinburgh, said: "It's a good thing for the Scottish fund management scene that one of our leading investment houses has taken such a positive step."
He added that despite perceptions of an "overbroked market", new players were still making approaches to firms, with a view to joining the Scottish wealth management "cluster".
Harry Morgan, at Thomas Miller Investment in Edinburgh, said: "They are two very powerful high-quality names. It will make an excellent combination."
SLW reported topping £1bn under management last year, suggesting that Newton's £3.6bn would more than quadruple its size, but Standard said the deal would probably "more than triple" assets.
Newton's private client business has about "3000 UK and international high net worth, ultra high net worth and charity clients", and strong distribution links with accountants and solicitors, SLW said.
All 79 directly employed Newton Private Clients staff will transfer to Standard Life. Caroline Tye, head of private clients at Newton, said: "We are delighted to be joining such a highly regarded discretionary investment management business."
The price was seen as being slightly below that struck in recent deals in the sector. One industry observer applauded the deal, but said: "Newton has been shedding clients at the lower end of the range, below £500,000, and we have heard they have been applying fairly stringent tests. How that fits with Standard Life's model is open to question."
He added: "You are essentially bolting on a private client manager to an investment factory, and you always have to ask whether that is for clients' benefit or because there are lots of cross-selling opportunities."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article