Private Equity News & Analysis

Ripplewood affiliate buys Kleinwort Benson for £225m

The British banking business will be the over-arching brand for RHJ’s future financial services acquisitions.

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RHJ International, the Euronext-listed investment business affiliated with private equity firm Ripplewood Holdings, has bought British banking group Kleinwort Benson for $225 million (€246 million; $367 million) in cash. RHJ will grow the Kleinwort Benson brand and use the business as a platform for further financial services acquisitions.

Kleinwort Benson, which is being carved out from German banking group Commerzbank, operates private banking, wealth management and fiduciary businesses and as of the end of 2008 had £5.4 billion in total assets under management and £15.7 billion in fiduciary assets under administration.

“This is an important strategic investment for RHJ in a very attractive market sector,” said Leonhard Fischer, chief executive of RHJ, in a statement. He added that Kleinwort Benson will be adopted as the overarching brand for its financial services businesses going forward.

Fischer told the Financial Times that he planned to transform Kleinwort Benson into an “old fashioned merchant bank”, raising money from institutions and rich individuals and seeking attractive investment opportunities, the paper reported this morning.

Private equity firms acquiring deposit-taking banks is a relatively new phenomenon in the UK. In May AnaCap Financial Partners, a financial services-focused private equity fund, sealed the first such deal with the acquisition of Ruffler Bank, a Surrey-based business focused on lending to individuals and small businesses.

The fallout from the financial crisis has pushed several firms to beef up their financial services expertise in the expectation that the sector will throw up some compelling opportunities.

Financial services focused Aquiline Capital Partners, a New York-based private equity firm, added Ken Thompson, the ousted chief executive of Wachovia, to its advisory roster in June.

Global buyout house Permira, meanwhile, has been building its financial services capabilities, adding former Morley Fund Management chief executive Keith Jones to its advisory network earlier this year and last year hiring James Fraser, previously head of financial services at LEK consulting, to lead its activity in the sector.