Evelyn Partners to target NatWest and RBC with sales pitch

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Evelyn Partners’ private equity backers are planning to kick off a sale process within months targeting potential suitors including NatWest and Royal Bank of Canada, in the latest sign of consolidation in the wealth management sector.

Permira and Warburg Pincus, which own one of the UK’s largest wealth managers, have called in investment bank Evercore to advise on the transaction, according to people familiar with the matter, who added that a deal could value the group at about £2.5bn.

Evelyn is planning to seize on demand from banks to beef up offerings for customers seeking financial advice, the people said. They added that the company would also be pitching to private equity groups and US wealth managers that want to expand in the UK, such as Raymond James.

A deal could intensify a wave of consolidation among European wealth managers seeking to bulk up to withstand the cost of mounting regulation. It comes as NatWest eyes acquisitions after its return to full private ownership in May, following a UK government bailout during the 2008 financial crisis.

NatWest would consider a bid when Evelyn came to market, one of the people said. The FTSE 100 bank previously held early-stage talks with Evelyn about a potential acquisition, the person added.

A sale would create an exit for Permira, which has owned Evelyn since 2014, when it merged what was then online wealth manager Bestinvest with rival firm Tilney. In 2020, Warburg Pincus injected capital to finance a merger between Tilney and Smith & Williamson, with the combined group renamed as Evelyn.

The private equity owners last year sold off Evelyn’s professional services arm to Apax, leaving the group solely focused on wealth management.

Fees from wealth management are seen as a more stable revenue stream for banks than lending income that is dependent on interest rates. But some have been cautious about buying wealth managers, which tend to trade on higher earnings multiples and can therefore be dilutive to a bank’s share price.

NatWest chief executive Paul Thwaite has repeatedly emphasised that the lender is focused on growing its wealth business, which includes ultra high net worth bank Coutts. 

Analysts have expected NatWest to pursue a major deal since it returned to full private ownership this year. NatWest recently offered £11bn to buy the UK operations of Santander UK, but was rejected, and ruled itself out of bidding for TSB, whose Spanish owner has agreed to sell the business to Santander.

Last year NatWest acquired the majority of Sainsbury’s Bank, as well as £2.5bn of prime residential mortgages from Metro Bank.

Thwaite told the Financial Times banking summit last year that the transactions “have shown that we’re on the front foot and where we see interesting opportunities that deliver good financials, good strategic fit, then we’ll take them”.

The chief executive of RBC told the FT in 2022 that the group was seeking to expand in wealth management in the UK, having acquired Brewin Dolphin earlier that year. Dave McKay said at the time: “Once we get the [Brewin Dolphin] integration well along the way, we will look for opportunities to acquire other smaller players.”

Paul Geddes, chief executive of Evelyn, worked at Royal Bank of Scotland in the early 2000s, becoming chief of its retail banking division in the UK, including NatWest, the brand which later became the name for the entire RBS group. The Evelyn sale is seen as a change of tack for the wealth manager, as Geddes’ appointment in 2023 was viewed as a precursor to a stock market listing.

Evelyn, Permira and Warburg Pincus declined to comment. NatWest and RBC said they did not comment on “market speculation”. Raymond James did not respond to a request for comment.