Dunedin backs Rathbone trust business carve out

The £24m deal carries a £5m vendor loan, suggesting the lower mid-market is not immune from the discrepancies between vendor and buyer’s price expectations.

UK mid-market firm Dunedin has backed the £23.5 million (€30 million; $41 million) management buyout of Rathbone Trust International, the Jersey-based trust business of 250-year old asset management group Rathbones.

Dunedin takes a “significant minority stake” in the business, which will operate under the name Hawksford International, while the remainder will be owned by the management team.

In addition to the £23.5 million, the deal includes a deferred consideration of £5 million of subordinated loan notes, to be repaid to the seller on Dunedin’s exit.

Shaun Middleton, managing director at Dunedin, suggested that while vendor loans were not unheard of for this size of deal, they had been rarely used in the last five years. “We may well see an increase in vendor loans at all levels of the market,” he told PEO.

Vendor loans can act as a bridge to cover the gap between the headline price that vendors hope to achieve and a lower price offered by bidders. Earlier this summer, Dutch publishing company Reed Elsevier was reported to be offering a $330 million vendor loan to help achieve a hoped-for $2 billion sale price for its subsidiary Reed Business Information.

Hawksford International designs, establishes and administers trusts, foundations, family offices, companies and private trust companies for high and ultra high net worth individuals and corporate clients.

John Hudson, director of Dunedin, joins the company’s board as a non-executive director.

“We will be looking, with Dunedin’s backing, at immediate opportunities to expand the business in Switzerland and also the Far East,” said Nigel Bentley, managing director of Hawksford International, in a statement.

Dunedin typically invests between £10 million and £75 million and is currently investing its £250 million 2006 buyout fund. Hawksford International is the firm’s first acquisition in the trust management sector.