BlueBay Asset Management's London headquarters
The Royal Bank of Canada is acquiring the U.K.-based BlueBay Asset Management PLC for $1.5 billion. RBC will thus gain access to a valuable network of wealthy customers and institutional clients.
At midyear, BlueBay boasted C$34.3 billion in assets, 62% of which stemmed from institutional investors – a 2% smaller portion as compared to that of the previous year. Wealthy private clients and third-party distributors are a growing segment of business, representing 30% of assets as compared to 26% the previous year.
“Much of BlueBay’s offering and RBC Global Asset Management’s offering is particularly suited for the high-net-worth and ultra-high-net-worth clients,” said George Lewis, head of RBC Wealth Management.
The acquisition of BlueBay enables RBC to initiate a greater number of institutional fixed-income solutions for retail clients who provide high revenues. One of the largest independents in Europe, BlueBay manages fixed-income debt funds, long-only funds, and alternative investment funds that span the full-range of fixed-income credit asset classes.
RBC’s acquisition follows an intensive search for hedge funds and private equity funds to purchase. The strategy is to increase offerings to high-net-worth customers. Mr. Lewis indicated that it favors liability-driven investing — gaining assets to meet current and future liabilities – as an area of growth for pension plans and wealthy clients.
“Bringing an institutional approach to both retail and ultra-high-net-worth will be the trends that we will continually see,” John Montalbano, chief executive of RBC Global Asset Management, said in a call with analysts Monday.
He said he sees the quest for customized solutions on the institutional side spilling over to the ultra-high-net-worth customers, a niche that RBC has been aggressively going after.
RBC’s acquisition of BlueBay, valued at C$1.56 billion, is set to close at the end of December. The move follows RBC Wealth Management’s decision to set up standalone U.K. and Emerging Markets businesses, in addition to Canada and the U.S.; set up a trust business; and appoint a deputy chairman for Ultra High Net Worth – International.
UHNW, which RBC categorizes as those with at least C$25 million in net worth, represents 25% of RBC Wealth Management’s revenue, though they make up only 5% of the unit’s client base, Lewis said in an earlier interview.