Good morning, ladies and gentlemen, welcome to this webcast. We appreciate that you could attend this call at such a short notice on what has been a pretty busy week. We quite delighted to have announced this morning that we have reached agreement with Rathbones to combine their business with our wealth and investment business in the U.K. to form the leading discretionary wealth manager in the U.K. with GBP 100 billion assets under management and administration. It really is a good day for Investec, we are delighted to be able to share the key aspects of the transaction as announced.
Just to give you some background, you will know that over time, we have grown our business in the U.K. through some combinations and through some acquisitions. Just to remind you, in 2005, we had a combination of Carr Sheppards Crosthwaite with Rensburg to form Rensburg Sheppards. That is a particularly successful combination for our business. In 2011, we acquired Williams de Broë. Again, we were able to integrate that particular acquisition quite successfully, bringing us to the business that we have today. The announcement is yet another important step. In fact, we think this is a pretty big step change for us in that we are able now to combine our business with one of the U.K.'s most prestigious brands in Rathbones.
As I said, this creates the leading and the largest discretionary wealth manager in the country with GBP 100 billion assets under management and administration. Specifically, we believe that this is the right scale that will enable us to grow the combined businesses as we move forward. We will talk more specifically about the benefits of scale in this type of business. More importantly, while the financial details of the combination are quite important, we also have announced that we have struck a partnership with the Rathbones Group, where between the Investec Group and Rathbones, we will be able to work in a commercial partnership that allows us to provide banking services to the clients of the enlarged Rathbones Group.
Conversely, they will be able to provide leading wealth management services to the clients of the Investec Group. As you know, it has been quite an important strategic thrust of us to offer banking and wealth services across both our businesses and our geographies. This particular transaction takes us much more forward in the U.K., gives us better scale, better relevance for Investec as a whole. Lastly, in my introductory comments, I would like to just stress that this is a combination, not a takeover by any one business over another. We think very highly of the attractiveness of the U.K. wealth management industry, and we are a long-term strategic player in this industry. We are delighted to be working with Rathbones.
Our interactions with both the management led by Paul and Clive Bannister on the board side has been anything but really fantastic for us. We look forward to continuing to work with them, supporting the enlarged group as we go forward. I would like to go into the key terms of the transaction as announced, an all share combination. Specifically, the percentage economic interest of 41.25% is a reflection of the contribution of our business to the enlarged business. Obviously, when you look at a business like this, you will look at funds under management, you will look at profitability, and you will look at many other aspects.
Having done that, we believe an appropriate percentage and participation for us would be 41.25%. As I said, it's an all share measure, so we are leaving our money invested in this business. It's about $1 billion of investment. As we go forward, we are not taking money off the table at all. This is a very strategic industry for us, and we're excited about the prospects for growth. We obviously have been looking at the developments within this industry for quite a long time. As you know, we have made some smaller acquisitions. Recently, we made an acquisition of Murray Asset Management in Scotland.
We thought to really catapult our strategy forward, we needed to look at one of the best counterparties, both in terms of culture, the commitment to client service, and the commitment to employees, et cetera. We decided to really go for the largest of scale possible with respect to consolidation. Why is the deal attractive to us if we look at the aspects offered? Maybe before I go to the strategic rationale, let me just touch on a few other governance related issues and how we see the management of the combined business.
Firstly, on governance, we will have a representation on the enlarged group as board, and we will have the right to appoint, to nominate, two directors to that board. We will also have a joint integration committee that will seek to integrate the two businesses over time so that we can realize the benefits, the synergy benefits that we will talk about a little later. We will obviously have this particular business operating under the Rathbones brand as we go forward, and we have also agreed that in our London headquarters, we will have the Rathbones business move into the Investec headquarters at 30 Gresham Street. The business will be led by Paul Stockton, the current CEO of Rathbones.
Iain Hooley, who sits next to me here, as our Chief Executive in Investec Wealth & Investment U.K. will be a member of that executive team and, together with a broader team, they will lead the integration and the future growth of our business. With respect to board representation, I did indicate that we will have two members on that board. One of those members will be Ciaran Whelan, who currently is the MD of Investec plc, and Ciaran has been quite instrumental in working on the transaction. Just moving to the next slide. Just to talk about why we believe this particular transaction makes strategic sense for us. First, in this industry, scale is important.
You have seen over the last 2, 3, 4 years a number of these combinations because scale is important. We believe that with better scale, we are able to invest more in capability, and Iain will talk about the enhanced client proposition a bit later just to see what is possible to do with a larger business. We are able to invest in technology. We are able to incentivize our colleagues much more directly in a pure wealth play. Going forward, the war for talent is important, and we believe that this enlarged business will be highly competitive and in fact will be very attractive in retaining, but also in attracting the best, the best of talent. As indicated, it is not only a financial transaction.
The ability of the two businesses to work together, beyond just the combined business, but also for us to be able to offer wealth services alongside our strategic partner in Rathbones, we believe adds significant current value and will add future value as well. We will talk again about where we see some of those opportunities in terms of in terms of growth. Again, as we look at the nature of this business, remember, we have always said strategically that we want to increase the participation of Investec in capital-light businesses and in particular in the U.K. This combination gives us the opportunity to continue to grow the contribution of capital-light businesses within the U.K. market.
When we talked about the terms of the transaction, we did indicate that in the announcement that we will have Rathbones as an independently listed business, in that we will have 29.9% voting rights. That will allow, potentially, Rathbones to continue to be a consolidator as we look forward, because we think growth and opportunity is really important for us as we go forward. The transaction we see as creating sustainable value for our stakeholders, in particular, for our shareholders, because the metrics are particularly attractive for us. Looking at the financial benefits of the transaction, we have disclosed that we expect at least GBP 60 million of pre-tax cost and revenue synergies.
We obviously have done mutual due diligence between the two businesses. We have a high degree of confidence in this number. As we said, this would be the least level of synergies that we expect going forward. We have disclosed to you also the cost to achieve these synergies. If you look at the synergies and the cost to achieve, you should be able to come to the conclusion that we will deliver adjusted earnings per share growth post the deal being implemented, and we start to see the benefits of the combination. As we also have indicated, this particular deal will leave our capital relatively neutral from a bank and group perspective.
We then would see the capital-light earnings over time leading to a much higher quality business and also leading to capital generation. We've been invested in this business for quite a long time, and our shareholders know how attractive the generation of cash and capital is coming out of this business. If I may move to the next slide. I'm not going to talk to this slide. We just have given you a pictorial depiction of the scale that we get in discretionary wealth management within the U.K., and that we would be the combined group, would be the leading player in the U.K. I won't talk to this slide, and I would like Iain to talk to the expanded and diversified client proposition that results from the combination.
Iain?
Thank you very much, Fani. I mean, this the combination of the two businesses undoubtedly bring significant benefits to our, the breadth and depth of our client proposition. and will deliver the things we need in order to stay at the forefront of the industry and ahead of the needs of our clients. just to illustrate a few of those points, I think the, we've referenced many times the importance of advice to our clients. This combination of the two businesses will significantly contribute to the enhancement of our advice capability. circa 250 people dedicated to the delivery of advice, and that's a significant strategic step forward for us.
With regards to the importance of ESG and sustainability, combining the two businesses' positions on that and then bringing the benefit of the maturity of the Rathbones proposition, again, that will be a significant step forward for us with regards to the delivery of that within our investment process. Digital and technology are important. The Rathbones platform that we will migrate onto is a modern established capable platform. We will also have the benefit of the investment that they're currently making in digital.
More importantly, looking forward, the scale of the business that we will have as a combined business will give us the resource and scale we need to continue to invest in those areas that are important to enhance our client proposition going forward. I think as well the funds proposition will be important to us, that we'll have access to the Rathbones established and well-respected funds proposition brings significant benefits to our overall offering to our clients, particularly with regards to how we can manage effectively when they're at the earlier stages of their wealth journey. I think I'd also reference as well the geographical footprint. We will have 23 offices across the U.K. and the Channel Islands.
This brings an established presence in strategically important areas in the country, where we don't currently have a presence. North East of England and East Anglia I'd pick on in particular, but more importantly, we'll reinforce the combined businesses' presence across important locations across the U.K. and Channel Islands. This brings significant benefits overall to our client proposition, both today and how we continue to develop that going forward.
Thank you, Iain. I couldn't have exposed it as well as you have. Thank you so much. I've talked quite a lot about the attractive long-term commercial partnership. This slide I'm not going to spend much time on. In our prior presentations, we have indicated that the flows of business between our banking business and our wealth business have become particularly significant. Over the last 18 months or so, we have seen approximately GBP 750 million of flows from our banking clients into our wealth business. As we go forward, we would hope that we will see this progress continue. We've seen the model work. We'll now look to make it work even better given the relative opportunity that exists between these two businesses.
A symbiotic relationship in that we would have a much larger Rathbones serving the wealth needs of our clients, and we will also on our side have both the expertise and the balance sheet to give banking products and services to the appropriate clients from the enlarged Rathbones Group. Quite an exciting opportunity for us to build more scale and to build more cross business from bank to wealth and from wealth to bank, which has been core to our One Investec strategy. I'm going to ask Nishlan just to talk to the work we have done around synergies. As indicated, our confidence in these numbers is quite high because there has been a lot of work done by the teams.
I think obviously the value creation really comes from bringing these two platforms together and bringing that value of scale into the business. If you look at this business, it's spread across 23 locations geographically and getting efficiency around property, efficiency around some of the operating models that will be deployed and are deploying that across a much wider business, as well as revenue synergies of around about GBP 10 million, as we bring some of the cash management processes together onto a single platform as well.
Overall, we're quite confident that this, you know, at least GBP 60 million level of synergy brought together on an annual basis, there will be cost to achieve, and that's we've estimated at about GBP 98 million, which is really in this enlarged platform that will be incurred over the first 2 years. Thereafter, you will see the clear implementation and run rate come through overall. Fani?
Thank you, Nishlan. Moving on to the next slide, where we talk about the financial impact and outlook for our business. As indicated, we expect an increase in the contribution of capital-light earnings as we go forward. As we get to the benefit of scale, the benefit of the synergies, we would expect much more of a contribution from capital-light businesses, something that has been strategically important for us. The mix of revenues for the group as a whole will continue to increase within the U.K. context. Really important: capital-light and increased revenues in the U.K.
As indicated, we do expect that post completion and post the integration, we will see an increase in our adjusted EPS. Also as indicated earlier, the quality of this revenue is really quite attractive to us as we go forward. The enlarged Rathbones Group will continue to have a progressive dividend policy. We would see that underpinning our capital generation and also underpinning our overall level of capital as we go forward. As I said, the impact on our capital is relatively marginal. In summary, I would like to again reiterate that we see compelling financial and strategic benefits of this particular combination. As indicated, it's an all share combination. We are investing in the enlarged group about $1 billion.
We're quite excited about that opportunity. Again, the benefits of scale should allow us to grow this business, both in terms of client proposition, ability to retain and attract our colleagues who will work inside of the business. We really think that this business will be far more competitive as we go forward, just given the benefits we have spoken about. Financially very attractive, but the ability for the two groups to work in a commercial partnership across banking services and wealth services, we believe is really quite important. As indicated earlier, we are culturally very compatible with a high degree of commitment to client service, we believe that stands us in good stead. I also talked earlier about our track record in integrating either combinations or acquisitions before.
With our partners in the Rathbones Group, we will support this independent business as it seeks growth, and hopefully, we can benefit as we go forward in any other opportunity that may come from consolidation. As an Investec Group as we go forward, we continue to be committed to wealth and bank from a One Investec strategy. This particular combination will allow us to continue to serve our U.K. clients across bank and wealth, but it'll also allow us to continue to serve our internationalizing South African clients. Iain's business already caters for a number of our South African clients.
We will continue to be able to do so, also have a level of collaboration between our South African business and the enlarged Rathbones , for instance, around research and sharing of research. We will be able to continue to collaborate. For our group, a really important step as we move forward. What do we expect over the next little while? The transaction from our perspective is a Class 2 transaction. From Rathbones, it's a Class 1 transaction, they will need to go through some shareholder approvals. A transaction of this nature will require certain regulatory approvals. We do expect that we should be able to get to completion towards quarter 3.
Also, hopefully in quarter two, we will get shareholder approvals from the Rathbones side. Then, obviously, it'll depend on how quickly we get the regulatory approvals for us to be able to have completion, hopefully in quarter four. A really great transaction. We're delighted to work with Rathbones. Over the last few months, or so, our teams have been working together and we look forward to continuing to support the development of this business. I think on that basis, we will open the call for questions. Ciaran has been very close to the dealings in the transaction, so, hopefully, Ciaran, when we get to question and answers, you will get to answer some questions.
Tesh, do we have some questions?
Gonna first go to Chorus Call conference call to get those questions, and then we'll move to the webcast.
Thank you very much. Just for a reminder for the participants on the phone lines, if you'd like to ask a question, please press star and then one. The first question comes from Alexander Bowers from Berenberg. Please proceed with your question, Alexander.
Good morning, everyone. Just two questions from me. Firstly, you talked about the synergies, I guess, as part of the Rathbones combination. Would there be you could talk about would there be any further synergies within Investec Group? Perhaps in the central costs, part of the business. Secondly, can you just talk a bit more about the sort of cross opportunities this creates for Investec, in particular for the U.K. private banking business, which I believe you've been sort of trying to grow. Lastly, from a regulatory standpoint, is there any risk around sort of the sort of scale of the business that this will become, and whether the regulator will take issue with that? Thanks.
Okay. Thanks, Alex. Can shall we take a few more questions and then we can respond to the questions?
Okay. The next question comes from Corinne Cunningham from. who is a Private Investor. Please proceed with your question, Corinne.
Hi there. I'm actually from Autonomous Research. A couple of questions from me, please. First of all, have you had any initial implications or indications from rating agencies as to what the impact might be on Investec Group? Also any implications for Investec Bank per se. I think you've mentioned it's capital neutral overall, just in terms of perhaps the business side of things, if you could expand on that. Lastly, just to confirm that this will be equity accounted. Thank you.
At this time, those are all the questions on the phone line.
Thank you. If we could take a last question on this round.
At this time, those are all the questions on the phone lines.
Thank you, Nishlan.
Okay. Just moving on to the questions around synergies. Obviously, there will be elements of efficiency and utilization of some of the platforms that Investec can offer the broader group itself, but there will also at times be stranded costs that will come into the system as well. Broadly speaking, I think we'll bring those together. You know, the overall synergies that we've indicated of about GBP 60 million for the broader group itself, you know, using the term at least because we do believe that number could be challenged as we move forward and when we work through implementation itself.
I think broadly speaking, there's a net positive change from the group's perspective, and the level of value creation I think will be significant. I don't think we're gonna go into too much detail around the changes that will come through from an Investec perspective because we don't really see those numbers as material. I think when we talk about opportunities, you know, if you look at the Investec bank in particular, it's focused around a high net worth client base and the fact that Rathbones will provide access to a further, you know, base of clients that we could potentially work through and bring into the fold. I think the point that Fani made earlier is if you look at the history, we've already demonstrated the ability to raise AUM.
I think over this last 18 odd months, that's been about GBP 750 million of AUM that's come from the client base within the banking business per se. We really see a strong relationship applying across the businesses. I think from a regulatory standpoint, you know, overall this transaction is a share for share transaction. For both Rathbones and for Investec, relatively neutral from an overall capital perspective. We don't really see any significant impact. Obviously, you know, this is a business of scale, so creating a business of GBP 100 billion is a large business, but it is in a large market. I think if you look at the overall size of this market, it exceeds overall around about GBP 2 trillion.
It's still a business that is seeking to ensure that we interact with our client base and we service our clients in the best possible way, and within the context of regulatory requirements that are out there. Overall, I think that's where we land. In terms of the question around rating agencies, I think really what you're looking at is that this investment is still an investment that's held by Investec Bank plc. Currently, the wealth business is a subsidiary of the bank, and that will effectively switch to, as correctly indicated, an equity accounted investment, which is a listed investment. To some extent that does provide, we believe, an enhancing position from an overall rating perspective, but that will be determined by the rating agencies per se.
Thank you, Nishlan. Anything you want to add, Ciaran, or, Iain?
Yep, I would just add that in terms of our reg approval, this transaction is obviously subject to that. We have been, both ourselves and the Rathbones Group, have been in extensive communication throughout the last 6 months with our relevant people. We will now go through a formal process with our with the FCA and the PRA and our South African regulators for a change of control, and we anticipate that will take up to 6 months or maybe a bit longer. As Fani says, the final quarter of this year, we would hope to get to implementation and completion and implementation.
Thank you. Any further questions from the Chorus Call?
There are no further questions, sir.
That's no problem.
Okay. Thank you. Tesh, questions from the line.
Yes. We've got 3 questions. Chris from Ninety One: Is the low voting stake in the transaction a function of the U.K. TRP restrictions to avoid the requirement for a minority offer? Would you like me to read all the questions?
Okay. The short answer is, it's this is a combination. A nil-premium combination. We are able on both sides, both Rathbones and ourselves, we are able to benefit from the scale that is created, the synergies that are available without either party having to make an offer. We are quite comfortable with where that is. As I indicated when I spoke earlier, being at below 30%, also allows Rathbones to continue to trade as an independent business. That should be good for value, liquidity. To the extent there are opportunities to further consolidate, this would be a vehicle that would be potent for such.
We think the structure is really optimal, both in terms of us being able to access the benefits, but also positioning Rathbones for the future growth that we think the scale makes possible.
Next one is from Garth, Business Day. Hi, Fani. You said a couple of times Investec Group was investing $1 billion in the combined entity. Please clarify exactly what you mean by this.
Hi, Garth. We've indicated in the releases that based on yesterday's closing price for Rathbones, our stake, the 41.25% of the combined group when we have had completion, and as we said, there's still some way to go given the requirements for approval, that would value our stake, our existing business, at GBP 839 million, which translate into $1 billion. It's easier to remember $1 billion, I think. That's why I've used that number. I hope that's clear, Garth.
The next one is from Radebe. Is a similar transaction in the U.K. banking business likely in order to accelerate and scale up the banking business? Or does management prefer the current organic measured approach?
We've been very successful in the banking business over the last three to four years. You will remember that we committed to invest in a private banking business. That business is now at scale, and we continue to see growth. We've talked about the synergistic benefits of that business, bringing flows into the wealth business. We like where we play in the U.K. in terms of our specialist niched operations in the U.K. Over the last three, four years, you've seen significant profitability in our business. We love our business the way it is. We will continue to invest in it. We are not looking for a combination on the banking side. We're really well-positioned.
Our clients love us, because of the specialization that we have, because of the high levels of service, because of the general commitment we have, to supporting clients.
The next one is from Chris, Ninety One: Are there any concerns from the Investec plc or Investec Bank plc from losing control over the dividend policy of the wealth management business?
I don't think we have concerns. This particular business is. I mean, Rathbones has a good history over time. You can go back and see how they have operated and paid dividends. We've owned a wealth business for a long time. We know how it works. We know its ability to generate capital-light revenues and cash. Essentially, your revenue turns to cash as it were. We do not harbor any concerns around that. We will work well with our partners in Rathbones. It's a great business, great tradition in wealth management. Great track record in terms of its ability to be profitable and to generate dividends. No concern at all, Chris.
The final question is from Henry Hall. Can you please clarify what would have been the consequence if your voting rights were above 30%?
Mr. Ciaran
Happy to take it.
Yeah, yeah. Ciaran, you go.
Well, in terms of the U.K. rules, anything over 30%, we would have been required to make all share offer.
That's it. Fani, we done. We done.
We done. Okay.
Yes, we done.
I think I'm going to just wrap it up.
Yes, done.
Are we done? Okay. Just to reiterate that for us, this is a really important transaction in the scale that it creates, in the wealth management business that we will be a large shareholder in, that we will support the continued development and growth of the enlarged Rathbones business post-completion, and that we see the benefits to us as being executable given the work that we have done already. As I said, there is a great fit strategically, culturally, operationally between the two businesses. The risk of implementation and integration we would regard as particularly low. Second, we are excited about the opportunity of the commercial partnership between the enlarged Rathbones business and our banking business.
We've shown already what we've been able to do together between Iain's business and the bank, and we will see better opportunity between the bank and an enlarged business. As we indicated, we think there is a great opportunity for our stakeholders, whether those be our clients, and Iain talked about what this deal will mean for our clients. We think it's a great opportunity for our colleagues, and we think it is really a compelling outcome for our shareholders. A nil-premium combination that allows us to have the benefits of scale and that gives us a platform to grow going forward. We're excited about it. We will be working quite diligently and hard to get to completion.
For our shareholders, we obviously thank them for their continued support over the last 3-4 years or so as we continue to roll out our strategy. To Iain and our colleagues in Wealth, good luck. We're going to be supporting you and working alongside you as we integrate the business. Thank you very much. If you have any further questions, as usual, be in contact with our team, and we can address any question that you may have as we go forward. Thank you.
Thank you.