Schroders' Cazenove Purchase Fuels New Manager Talk

UPDATE: Schroders is to buy Cazenove Capital, fuelling talk of who will replace outgoing manager Richard Buxton

Holly Cook 25 March, 2013 | 11:00AM
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Updated following the announcement on March 25 that a deal has been agreed. Originally published March 22.

Schroders PLC (SDR) confirmed on Monday that is to buy boutique fund management firm Cazenove Capital for £424 million or 135p per ordinary share. Shares in Schroders were up 2.5% immediately following news of the deal, which sees the FTSE 100-listed firm increase its assets under management by more than £17 billion.

Following the recent announcement that star manager Richard Buxton and two of his colleagues will shortly depart Schroders' UK equity team for competitor Old Mutual, investors of both Schroders stock and the firm's managed UK equity funds have been keen to hear who will fill Buxton’s large boots.

Should all Cazenove staff be taken on by Schroders, the latter's UK equity team will be bolstered by the addition of Cazenove UK Opportunities manager Julie Dean, under whose tenure the fund has earned a Bronze Morningstar OBSR Analyst Rating; Cazenove UK Smaller Companies manager Paul Marriage, whose fund is also rated Bronze; and Cazenove UK Equity Income, which driven by Matthew Hudson has outperformed its Morningstar category peers and the FTSE All Share Index since 2010, earning it a 5-Star quantitive rating.

The Cazenove acquisition will also boost Schroders' European and multi-asset capabilities. Cazenove's European equity team and multi-asset equity team are headed by Chris Rice and Marcus Brookes, respectively. Rice's Cazenove European fund is rated Silver by Morningstar OBSR analyst Muna Abu-Habsa, who cites the fund's "talented manager backed by a seasoned European equities team and a thoroughly executed investment process that has delivered through time."

Chetan Modi, who rates Cazenove UK Opportunities at Morningstar OBSR, highlights "the firm-wide philosophy [that] has been proven over the long term by the Cazenove pan-European equity team."

Morningstar OBSR analysts placed Schroder UK Alpha Plus fund under review following news of Buxton’s resignation; the fund had previously been rated Gold. Schroder UK Equity fund, which was formally a Bronze-rated fund, has also been placed under review by Morningstar analysts on the back of confirmation co-manager Errol Francis is leaving for Old Mutual in June. Investment trust Schroder UK Growth (SDU), also managed by Buxton, is now under review versus its former Silver rating.

Schroders confirmed last Friday that it is in discussions regarding a possible cash offer "with loan note alternative" for the entire issued ordinary share capital of Cazenove Capital; while Cazenove announced that the talks do not amount to a firm intention to make an offer and "accordingly there can be no certainty that any offer will be made".

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Schroder UK Alpha Income C Inc1.68 GBP-0.30Rating
Schroder UK Alpha Plus Acc2.44 GBP-0.16Rating
Schroder UK Dynamic Smaller Coms C Acc4.94 GBP-0.56Rating
Schroders PLC314.00 GBX-0.88Rating

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites

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