The new firm will be 50.1% owned by Lloyds, with the rest held by Schroders, and an announcement is expected later this month, according to Sky. The deal is designed to combine Lloyds’ distribution through its branch network and Schroders’ fund management skills.
The arrangement would also see Schroders take on the coveted £109 billion Lloyds investment management mandate, which is set to be taken from the current holders Aberdeen Asset Management, following its merger with Standard Life.
It was reported last week that Schroders was set to hand a stake in its wealth arm Cazenove Capital to Lloyds, led by CEO António Horta Osório (pictured), as part of the deal to secure the investment mandate. This is still on the table, with the bank to be given a 19.9% stake in Cazenove, according to Sky.
The new joint venture wealth firm will be separate from Cazenove, according to reports.
The combined value of the deal is understood to be around £500 million, with Cazenove and the £13 billion new entity valued at roughly £250 million a piece.
Schroders bought Cazenove in 2013 for £424 million, and the wealth firm has since grown to manage £46 billion of assets.
The imaginative deal, which is broad in scope, perhaps reflects how creative companies are willing to be to bag the £109 billion mandate.
BlackRock, which was also in the running, is now believed to be out of the picture. The contract had been held by Aberdeen since 2014, but Lloyds pulled it in February over competition concerns around Scottish Widows following the merger of its parent Standard Life and Aberdeen Asset Management.
The bank netted £344 million from the disposal, which represented 98 million shares at a price of 352.5p each.
Since Standard Life Aberdeen was taken off the mandate, there have been a number of businesses pitching for it, including Goldman Sachs and JP Morgan. However, Schroders has now apparently ousted the last remaining contender, BlackRock.
This would not be the first time Lloyds has had a holding in a wealth management business. It previously owned a stake in St James’s Place. It began decreasing its position in the company in 2013, selling its shares for £670 million in total.