Royal Bank of Canada’s recent acquisition of the U.K.-based BlueBay Asset Management PLC lends further credence to the claim that Canada is guiding the global M&A movement.
Coming as it does, barely days after PwC reported Canada’s formidable role in the global deal-making arena, RBC Wealth Management’s C$1.56-billion marquee megadeal is further proof that Canadian M&A activity has far outpaced the global trend while expanding RBC’s global reach from three geographic wealth management businesses to four—Canada, U.S., U.K. and emerging markets.
“This acquisition will further RBC’s strategy to leverage our position as a Top 10 global wealth manager and continue to expand our asset management solutions for the benefit of our clients around the world,” said George Lewis, group head, with RBC Wealth Management. “BlueBay is an ideal fit with RBC’s growing asset management business, and we are confident that this transaction will benefit clients, employees and shareholders of both firms.”
The new deal is aimed at replicating RBC Wealth Management’s success in the ultra-high net worth segment in Canada across international markets and to grow its onshore U.K. wealth management business by leveraging a growing number of solutions for investors.
BlueBay is one of Europe’s largest independent managers of fixed income debt funds and products, with US$40 billion in assets under management on behalf of institutional and high-net worth investors in the U.K., Europe, the U.S., the Middle East, Asia and Australasia.
Under the terms of the transaction, RBC will acquire 100% of BlueBay’s outstanding shares for cash.
There are a number of strategic benefits that the consolidation of investment management businesses could potentially bring. “If you take a look at the consolidation trends, they are really revolving around two things: the acquisition of the manufacturer and acquisition of the distribution,” said Lewis, at a conference call earlier this morning. “This comes together nicely for both organizations and allows both of us to achieve key needs.”
“What we’re acquiring today is a company at the top of its game,” said John Montalbano, CEO of RBC Global Asset Management, during the conference call. He said the two have a complementary fit from the manufacturing perspective. “Their strengths are where we have key gaps from a global perspective.”
When the two companies’ respective strengths are brought together, very little remains to be changed, he added. “Our intention is to change very little and seek the opportunities where they reside.”
Similar sentiments were echoed by Hugh Willis, CEO of BlueBay. “RBC’s strength and stability make it an ideal partner for BlueBay,” he said. “Its commitment to its clients and its high standards of business practices mirror our own and lie at the heart of the excellent cultural fit between our firms. We greatly look forward to working together in providing our clients with world-class investment solutions.”
The deal highlights RBC Wealth Management’s continued drive for growth by leveraging the capabilities and expertise of its most profitable business, RBC Global Asset Management.
In addition to its strong U.K. operations, BlueBay brings with it new institutional relationships and significant sales relationships in Europe and a strong distribution position in Japan, all of which is expected to help enhance RBC’s geographic reach.
Read: Canada guides global M&A movement
(10/18/10)