Royal Bank of Canada announced Monday it has agreed to buy BlueBay Asset Management plc.

The acquisition would be the next step in the Toronto banking company’s plan to expand RBC Wealth Management.

Under the terms of the acquisition, BlueBay shareholders would be entitled to receive 485 pence in cash for each BlueBay share. This represents a premium of 29% to the last closing price of BlueBay shares, as at Friday. The acquisition values the issued share capital of BlueBay at approximately $1.54 billion.

It is expected that the acquisition will be implemented by way of a court-approved arrangement and that formal documentation will be sent to BlueBay shareholders in November.

BlueBay’s board has unanimously recommended its shareholders vote in favor of the deal, which is expected to close by the end of December.

The deal would be funded using RBC’s existing cash resources, and is not expected to have a material impact on earnings.

BlueBay, which is based in London, is one of Europe’s largest independent managers of fixed income debt funds and products, with $40 billion in assets under management as at Sept. 30. It manages assets for institutional and high net worth investors in the United Kingdom, Europe, the United States, the Middle East, Asia and Australasia.

BlueBay manages a combination of long-only and alternative investment strategies across the sub-asset classes of fixed income credit, primarily focused on European and emerging markets strategies, including: Investment grade corporate debt, high yield corporate debt, emerging market debt, convertible bonds, distressed debt, and multi-strategy debt capabilities.

When the deal closes, BlueBay is expected to retain its investment autonomy and related operational independence.

“This acquisition will further RBC’s strategy to leverage our position as a top 10 global wealth manager, and continue to expand our asset management solutions for the benefit of our clients around the world,” said George Lewis, the group head of RBC Wealth Management. “BlueBay is an ideal fit with RBC’s growing asset management business and we are confident that this transaction will benefit clients, employees and shareholders of both firms.”

In September, RBC Wealth announced it will be moving from three geographic wealth management businesses to four, Canada, the United States, the United Kingdom and emerging markets. That initiative was announced in an effort to replicate the success achieved in the ultra-high-net-worth segment in Canada across international markets. The company also plans to establish a global trust business.


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