Hoare Govett Executives May Team Up With Oriel for RBS Buyout
January 18, 2012, 9:21 AM ESTBy Liam Vaughan
Jan. 6 (Bloomberg) -- Hoare Govett Ltd.’s managing directors are considering teaming up with Oriel Securities Ltd. to buy out the U.K. broker from parent Royal Bank of Scotland Group Plc, two people with knowledge of the talks said.
A deal would allow RBS to save the costs of firing the unit’s 30 or so employees, said the people, who declined to be identified because the talks are private. Edinburgh-based RBS would receive little if anything in cash for the unit, the people said, adding that the process is at an early stage.
RBS Chief Executive Officer Stephen Hester, 51, is shrinking the lender’s securities unit after the bank received the biggest banking bailout in the world in 2008. The lender may sell or shut its equities unit, which includes Hoare Govett, two people with knowledge of the situation said on Dec. 19. A formal announcement is expected by the time the Edinburgh-based bank reports full-year earnings on Feb. 23, the people said.
The Scottish bank acquired the 90-year-old broker as part of its 72 billion-euro ($92 billion) purchase of ABN Amro with Fortis and Spain’s Banco Santander SA in 2007. A deal with Oriel would reunite Hoare Govett with its former chairman, Peter Meinertzhagen, who became a director of the London-based broker in December 2010. Oriel’s chief executive officer, Simon Bragg, as well as its head of sales and head of equities all previously worked at Hoare Govett. Oriel was founded by Bragg in 2002.
RBC, Barclays
RBS has hired Lazard Ltd. to advise on asset sales as it shrinks from a global, universal bank into a smaller consumer and corporate bank. The lender has already cut more than 30,000 jobs since its bailout. In August, the bank said it will cut a further 2,000 job cuts at its securities unit over the next 12 to 18 months.
RBC Capital Markets, the investment banking arm of Toronto- based Royal Bank of Canada, and Barclays Plc, the U.K.’s second- biggest lender by assets, may show an interest in Hoare Govett because they are both seeking to expand their equities units, one of the people said. Officials at Hoare Govett, Oriel, Barclays, RBS and Lazard declined to comment. Meinertzhagen didn’t return e-mails seeking comment.
Found only in the U.K., corporate brokers are appointed by companies to liaise with institutional shareholders and offer strategic advice, often leading to underwriting and corporate- finance work. Hoare Govett’s clients include GlaxoSmithKline Plc, the U.K.’s largest pharmaceuticals company, and Imperial Tobacco Group Plc, the maker of Rizla cigarette papers and Cohiba cigars.
Meinertzhagen’s deals include the merger of Glaxo Wellcome and SmithKline Beecham in 2000 and Vodafone’s spinoff from Racal in 1991.
--Editors: Edward Evans, Keith Campbell.
To contact the reporter on this story: Liam Vaughan in London at Lvaughan6@bloomberg.net
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
