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Investec wins battle for Evolution Securities with £233m all-share offer

A battle to take over investment banking firm Evolution Securities has been resolved in favour of South African owned group Investec.

Evolution has accepted an all share offer from Investec which values each share at around 100p and the total business at £233m. The field was left clear for Investec when rival bidder pulled out of the race late on Thursday night. The offer has been recommended by Evo’s management (2.6%) and Investec has also received acceptances from Blackrock and Majedie (11.7%) and expects to receive one from Aberforth (11.8%). Investec managing director Bernard Kantor said:

Investec has built a strong platform in the UK, and we expect the businesses we are acquiring to thrive as part of the group.

The move gives Investec greater scale in both wealth management – through Evo’s Williams de Broe business – and investment banking. The field is highly competitive at the moment, and Evo should benefit from the backing of a well-capitalised Investec. There are, however, likely to be job cuts, although these are expected to be limited to the investment banking business.

In the market Evo shares have edged up 1p to 95p while Investec is down 5.2p at 422.3p. Analysts at Numis said:

We re-iterate our buy recommendation on Investec as the deal builds incremental funds under management in the area which we believe is most under-appreciated and hence most undervalued at Investec. We expect this to change in time as the market gives more valuation benefit to what is now a large asset management business (nearly £100bn funds under management on a pro-forma basis). We believe there is also upside potential from the eventual recovery at the private bank.

Keith Baird at Oriel Securities said:

With Canaccord pulling out the odds of a better offer look low and so we expect the bid to succeed with the other shareholders even though it is all paper. Investec plus Evolution [circa 150 staff in London] means plenty of rationalisation. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds