Rathbones Group Plc · LSE:RAT
Rathbones — Merger or Acquisition (April 2023)
30 slides from Rathbones's merger presentation, Apr 4, 2023
Slide 1: Rathbones' combination with Investec Wealth & Investment UK: Creating the UK's leading discretionary wealth manager
& RATHBONES oa “Rathbones’ combingtion with Investec Wealth’ “a rales: UK ee CREATING THE UK’ S LEADING. Bag RETTO NARS WEALTH MANAGER ES < a oe : 4 April 2023 Po) yet
Slide 2: A compelling combination that brings together two trusted wealth businesses
2 A COMPELLING COMBINATION THAT BRINGS TOGETHER TWO TRUSTED WEALTH BUSINESSES Compelling strategic and financial proposition FUMA: £60.2bn All-share combination under the Rathbones brand Enhanced platform accelerates Rathbones’ growth strategy FUMA: £39.7bn Establishes a strategic partnership with I
Slide 3: Transaction overview
3 TRANSACTION OVERVIEW — All-share combination with new Rathbones shares issued in exchange for 100% of Investec W&I UK’s share capital(1) — Enlarged Rathbones Group will remain an independent premium-listed company operating under the Rathbones brand Transaction Terms — Investec Group to have 41.25
Slide 4: Attractive financial returns and value creation
4 ATTRACTIVE FINANCIAL RETURNS AND VALUE CREATION Synergies — Targeting total run-rate cash synergies of at least £60 million; 90%+ to be realised in the third full year following completion — Expected to be accretive to underlying EPS in first full year following completion Returns — Targeting low-
Slide 5: Transaction rationale
TRANSACTION RATIONALE Paul Stockton, Group CEO
Slide 6: UK wealth is an attractive market which increasingly requires scale
6 UK WEALTH IS AN ATTRACTIVE MARKET WHICH INCREASINGLY REQUIRES SCALE Long-term structural drivers Accompanied by challenges Scale increasingly critical for future success Trusted brand to meet ever-evolving client Increasing wealth Technology and people cost inflation needs and expectations Ageing
Slide 7: A compelling combination which accelerates and complements our growth strategy
7 A COMPELLING COMBINATION WHICH ACCELERATES AND COMPLEMENTS OUR GROWTH STRATEGY… ✓ Adds breadth and depth to investment capability ✓ Leverages Rathbones’ digital platform and ✓ Grows the advice footprint operating model over an enlarged business ✓ Access to a broad range of services Enriching the c
Slide 8: …with the right cultural fit to improve outcomes…
8 …WITH THE RIGHT CULTURAL FIT TO IMPROVE OUTCOMES… Long-Established Businesses with Common Operating Principles... … Delivering Key Client Outcomes Highly personalised service Stability and reassurance Collaborative approach to service delivery Choice of proposition and greater affinity Ali
Slide 9: …and a unique opportunity to benefit from technology
9 …AND A UNIQUE OPPORTUNITY TO BENEFIT FROM TECHNOLOGY Leveraging Rathbones’ Digital Programme Across the Enlarged Group Prospecting — Highly regarded app and portal Clients — Digital communication and ease of doing business — Prospecting, reporting and support tools Client and Investment Managers a
Slide 10: Establishing a strategic relationship with Investec Group
10 ESTABLISHING A STRATEGIC RELATIONSHIP WITH INVESTEC GROUP Significant Collaboration Opportunities Referrals to Rathbones for wealth management services Provision of selected operational services Rathbones client access to Investec Group banking services Growing Investec Bank UK client base… …with
Slide 11: Agreed integration approach already clearly defined
11 AGREED INTEGRATION APPROACH ALREADY CLEARLY DEFINED Completion Today Early Q4 2023 During H1 2025 Phase 1: Pre-Completion Phase 2: Parallel Run Phase 4: Optimise Phase 3: Integrate —Combined operating model delivered —Benefits fully realised over medium term —Integration delivery —Preparation act
Slide 12: Listed group governance and experienced executive leadership
12 LISTED GROUP GOVERNANCE AND EXPERIENCED EXECUTIVE LEADERSHIP Board of Directors Management Integration Governance — Dedicated oversight: Current Rathbones Board — Joint Integration Steering Committee Four independent comprising senior executives from both non-executive Rathbones and Investec Grou
Slide 13: Creating the UK's leading discretionary wealth manager
13 CREATING THE UK’S LEADING DISCRETIONARY WEALTH MANAGER Discretionary FUM (£bn) Enlarged Rathbones Clear Category Leader With… ~£100bn — Greater ability to invest in client experience and ~£20bn from Rathbones Funds, SHL proposition, marketing and distribution ~£20bn FUMA and Investec W&I UK non-
Slide 14: Financial impact and outlook
FINANCIAL IMPACT AND OUTLOOK Jennifer Mathias, Group CFO
Slide 15: Investec W&I UK: an attractive business with strong fundamentals
15 INVESTEC W&I UK: AN ATTRACTIVE BUSINESS WITH STRONG FUNDAMENTALS 31-March year end Closing FUMA (£bn) Fund Type by Value (%) Size of Client Relationship by Value (%) Sep-22 Sep-22 41 44 40 9% 5% <£250k 33 10% 17% (3) 30% <£250k-£500k Private Clients 16% £500k-£1.0m Intermediaries £1.0m-£2.0m Char
Slide 16: High quality enlarged business with scale
16 HIGH QUALITY ENLARGED BUSINESS WITH SCALE FUMA by Mandate FUMA by Mandate 10% 11% 4% 3% 7% £60.2bn £39.7bn (31-Dec-22) (30-Sep-22) Discretionary Advisory Single strategy funds (1) 78% Execution-only 87% 352 72 131 15 325 45 15 Investment Financial IFAs through Offices across Investment Financial
Slide 17: Scaled business targeting total run-rate cash synergies of at least £60m
17 SCALED BUSINESS TARGETING TOTAL RUN-RATE CASH SYNERGIES OF AT LEAST £60M (1) Run-rate Cash Synergies of at Least £60m(1) Synergy Phasing ~£18m ~£32m ~£10m 90%+ Tech platforms + Other operational Net interest operations efficiencies income(2) ~70% Leveraging Rathbones’ Consolidation of Migration o
Slide 18: Strong outlook for the enlarged Rathbones Group
18 STRONG OUTLOOK FOR THE ENLARGED RATHBONES GROUP 2023 2024 Medium Term Post Integration FY22 year end results guidance re-affirmed 3+ years post completion ▪ Deal completion expected in early ▪ First full year of consolidation, albeit ▪ Strong market position for growth Q4’23 synergy benefits not
Slide 19: Summary and next steps
SUMMARY AND NEXT STEPS Paul Stockton, Group CEO
Slide 20: Next steps
20 NEXT STEPS Early Q4 2023 Q2 2023 Q2 2023 Expected completion Publication of circular / Rathbones shareholder (subject to regulatory prospectus vote approvals)
Slide 21: A strategically compelling combination
21 A STRATEGICALLY COMPELLING COMBINATION A compelling combination which accelerates and complements our growth strategy Attractive strategic and financial rationale with significant synergy potential Right cultural fit to improve outcomes A unique opportunity to leverage Rathbones’ digital investme
Slide 22: Appendix
Divider 5 APPENDIX
Slide 23: Ownership structure provides certainty to existing Rathbones shareholders
23 OWNERSHIP STRUCTURE PROVIDES CERTAINTY TO EXISTING RATHBONES SHAREHOLDERS Enlarged Rathbones Group Shareholder Structure Rights Attaching to Rathbones Shares Investec Group Existing Rathbones Shareholders — Rights of existing Rathbones ordinary shares remain unchanged Economic interest Economic i
Slide 24: Relationship agreement designed to ensure independence of Rathbones
24 RELATIONSHIP AGREEMENT DESIGNED TO ENSURE INDEPENDENCE OF RATHBONES Independence — Customary independence provisions on arm’s length basis — Rathbones Board to maintain independence in compliance with UK Corporate Governance Code — Investec Bank Plc right to appoint (subject to approval of Rathbo
Slide 25: Strong transaction and integration track record
25 STRONG TRANSACTION AND INTEGRATION TRACK RECORD Other historical transactions Saunderson House (2021) Year Target FUMA (£bn) Notes Integration progressing well Barclays Wealth Court 2020 c.£440m FUM Encouraging revenue and growth potential of Protection team Reaffirming targets 2015 Vision Indepe
Slide 26: Enhanced combined geographic reach
26 ENHANCED COMBINED GEOGRAPHIC REACH Broad geographic presence with 23 locations Glasgow Edinburgh across the UK Newcastle Belfast Kendal Leeds Increases penetration in key regional centres Liverpool Manchester Sheffield Birmingham Cambridge Cheltenham Limited overlap – 7 locations Bristol London W
Slide 27: Investec W&I UK historical financial information
27 INVESTEC W&I UK HISTORICAL FINANCIAL INFORMATION 12 months to 31-Mar-2020 12 months to 31-Mar-2021 12-months to 31-Mar-2022 6 months to 30-Sep-2022 Closing FUMA £32.8bn £41.3bn £43.7bn £39.7bn Net organic flows £0.5bn £1.1bn £1.2bn £0.4bn Organic Growth Rate(1) 1.3% 3.4% 2.9% 2.0%(2) Operating in
Slide 28: Rathbones Group historical financial information
28 RATHBONES GROUP HISTORICAL FINANCIAL INFORMATION 31-December year end Closing Total FUMA (£bn) Fund Type by Value (%) Size of Client Relationship by Value (%) Dec-22 Dec-22 68 60 13% 5% <£250k 55 20% 11% 50 <£250k-£500k 10% Private Clients £500k-£750k 10% Intermediaries 10% £750k-£1.5m Charities
Slide 29: Sources and bases
29 SOURCES AND BASES 1. The latest practicable date before the date of this announcement is 3 April 2023 (“Latest Practicable Date”). 2. Rathbones had 63,433,381 ordinary shares in issue as at the Latest Practicable Date. 3. Investec W&I UK’s equity value calculated using 44,538,331 new Rathbones sh
Slide 30: Disclaimer
30 DISCLAIMER NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. By attending (whether in person, by telephone or webcast) this presenta