Investec Wealth & Investment’s chief executive Jonathan Wragg hopes the firm’s experience to date as a consolidator will allow it to lead the next wave of mergers and acquisitions.
Wragg (pictured) said Investec will not look to do any more deals until the integration of Williams de Broë (WdB) is complete, with a net organic growth target of 5% remaining a primary focus for the foreseeable future.
But looking further ahead, with two integrations under the wealth manager’s belt over the past few years and around £20 billion in assets, the CEO said further deals could not be ruled out, particularly as the rising costs of doing business are causing management teams of sub-scale businesses to consider selling up.‘We will not be rushing to do any other major acquisition until we feel the merged Investec Wealth & Investment is properly integrated and running efficiently. That has to be our primary focus,’ Wragg said.
‘History is littered with examples of companies going on a sequence of buying businesses without properly integrating them. That tends to work for a short period and then it tends to fall apart because it is important you integrate. We will not be rushing in the immediate future to do anything else until this acquisition is bedded down.
‘Beyond that period we will very much keep an open mind. Looking at the sector in three to four years’ time, I would like to think we will be shown to have been at the vanguard of the next wave of consolidation,’ Wragg said in an exclusive interview with Wealth Manager.
He hopes the firm’s acquisition of WdB parent Evolution, which followed the takeover of Rensburg Sheppards by the South African bank in 2010, has given it an early mover advantage as the industry consolidates further. However, he stressed it has no desire to ‘get bigger for the sake of being bigger’.
Drawing on his experience through the deals, alongside the merger of Carr Sheppards, Wragg said although no two integrations are the same, the retention of key people is integral.
‘They all have unique characteristics to an extent. Although we probably knew it beforehand when we embarked on the Rensburg Sheppards acquisition, as you go through the journey it becomes even clearer to you that you are dealing with people businesses. The assets of these businesses are the people,’ he said.
It is for this reason that he opted to ‘buddy up’ teams from WdB and Investec during the period preceding the official integration, and sought to stem an outflow of investment managers by making staff feel valued.
‘I am pleased to say the number of client-facing investment managers that have left is minimal; I can easily count them on one hand. Hopefully this reflects the fact we have tried to treat people sensibly and make sure people feel looked after,’ he added.
Wragg says the firm will continue to focus on people and aims to attract talent in the industry. It hopes its culture and investment process will prove a draw against the backdrop of a changing industry. He aims to achieve 5% net growth by focusing on expanding its investment proposition for advisers – an area where the firm runs just under £3 billion.
‘What 5% net tends to mean is you have got to grow 10% gross, which is quite a target when you look at a business of this size and maturity. Clearly, if you look at the IFA market that is possibly one of the faster growing streams alongside higher net worth clients,’ he said.
With the Williams de Broë brand officially dropped, the merger of investment processes well under way, a unified new rate card for new clients across both historic businesses and the London team now operating from one office, Wragg expects the real benefits of the synergies between the two businesses to feed through in 2013, especially operating from one platform.