Old Mutual Sweetens £650m Bid For Wealth Firm

By Mark Kleinman, City Editor

Old Mutual, the London-listed South African financial services group, is in advanced talks about a £650m takeover of the UK's second-biggest independent wealth manager.

Sky News has learnt that Old Mutual is closing in on an agreement to acquire Quilter Cheviot after sweetening its offer for the company by approximately £50m.

A deal could be struck within a few weeks, continuing a shake-up of the City's wealth management landscape at a time of substantial regulatory change.

Quilter Cheviot, which is owned by the private equity firm Bridgepoint, was the subject of an earlier bid from Old Mutual during the summer.

People close to the situation said that a deal between the two companies was not certain, adding that Bridgepoint was continuing to progress its plans for a stock market listing that would catapult Quilter Cheviot into the ranks of London's 350 largest listed companies.

Other prospective buyers, including Investec, are said to have examined a takeover of Quilter Cheviot although it was unclear whether any other formal offers have been tabled.

In a statement issued last month, Bridgepoint said:

"Inevitably when IPO plans are being prepared there is parallel speculation and rumours about alternatives. We never comment on such rumours."

The addition of Quilter Cheviot to Old Mutual's wealth management arm would create a more powerful platform for serving affluent clients at a time of consolidation across the sector.

Another big player, Bestinvest, was sold to Permira, another buyout firm, last year, with a follow-on deal taking the firm's assets under management to approximately £9bn.

A flurry of deals has been accelerated by regulatory reforms known as the Retail Distribution Review, which have altered the way that wealth managers are remunerated for their work, shifting from a largely commission-based system to one based on the volume of assets under management.

Quilter Cheviot, which manages approximately £16bn in assets, was formed in 2012 from the merger of Quilter & Co and Cheviot Asset Management.

The company traces its roots back to 1771, making it one of the UK's oldest financial services firms.

Evercore, an investment bank, is advising Bridgepoint, while Old Mutual is being advised by bankers at Rothschild on the talks, insiders said.

Old Mutual, which declined to comment, is interested in expanding its wealth management business at a time when it is also reshaping parts of its business.

On Thursday, the Anglo-South African group priced the New York listing of its US asset management business slightly below its target range.

Bridgepoint also declined to comment.

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