Broker snap: Schroders shares surge on equity inflows, acquistions

3rd Apr 2013 08:44

Schroders was topping the FTSE 100 in early Wednesday trading as Credit Suisse said it expects the fund manager to gain from positive net inflows into European equities. "The broadening out of inflows into areas such as European equities is broadly positive for a number of names under our coverage, particularly Henderson and Schroders," the broker said."[...] European equities, which have been out of favour for most of 2011/2012, continued to see positive net inflows, however UK and North American equities continue to suffer net outflows."The company's shares also gained on news Tuesday that its subsidiary, Schroder US Holdings, completed the acquisition of 100% of the share capital of STW Fixed Income Management, a speciality fixed income manager. STW, which provides custom solutions to meet the needs of a diverse client base, had assets under management (AuM) of $11.6bn at December 31st. The acquisition increases Schroders' AuM by 50% to $35bn, according to Chief Executive Michael Dobson.Schroders is also in talks to buy investment business Cazenove Capital which has about £18.7bn AuM."The proposed acquisition of Cazenove Capital appears sensible as we see limited execution risk aided by a good cultural fit," said Credit Suisse in a statement last month."The deal is an appropriate use of surplus capital (we estimate return on investment of 9.0%) and remaining surplus capital of £0.6bn. The deal nearly doubles AuM in the private bank to over £28bn where the Cazenove brand will be retained and emphasis will be on expanding scale and capabilities."RD