Evolution shares rise 9% as Canaccord considers bid

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Shares in Evolution Group jumped 9 per cent on Tuesday after Canaccord Financial confirmed it was considering an approach for the stockbroker.

The Canada-based financial services group said it had held “preliminary discussions with Evolution regarding a potential offer”.

Evolution is already in talks with Investec, the Anglo-South African financial group, which made an approach this month.

Like Evolution, Canaccord – which last month agreed to buy half of the Australian equities advisory firm BGF Capital – has a strong presence in the mining sector. The company has wealth management and equities businesses and both companies have strong positions in the natural resources sector.

“A bid from Canaccord would make sense both in wealth management and in broking, but they aren’t going to do a deal at any price. It appears to be an auction between these two companies, which might be resolved through a break-up with Investec getting the wealth management arm and Canaccord the broking side,” said Keith Baird, analyst at Oriel Securities.

Investec said it would not comment on any prospect of competing offers.

Evolution has tried to offset losses from its investment banking arm through the expansion of its wealth management business. Last week, it confirmed the acquisition of BNP Paribas Private Investment Management through its private client arm Williams de Broë, for £25m in cash.

On Monday, Lord MacLaurin returned to Evolution’s board as a non-executive director, three months after he left.

He told the Financial Times that Evolution had attracted potential bid interest from more than one party. Evolution confirmed the expression of interest from Canaccord and also that it had “received approaches from a number of other parties interested in either part or the whole of the company”.

“All approaches are at a very early stage and the board is far from certain as to the terms of any potential offer or that any will ultimately result in an offer being made,” said Evolution.

Canaccord said its interest was dependent on a number of factors including a unanimous recommendation from the Evolution board and the satisfactory completion of due diligence.

While two of Evolution’s top-10 institutional shareholders have said they would hold out for 120p a share, another has said it supports the management in seeking a deal at 100p.

Evolution’s large shareholders include BlackRock, Scottish Widows Investment Partnership, Aberforth Partners, Lansdowne Partners, Schroders, Universities Superannuation Scheme, Artemis Investment Management and Legal & General.

Evolution’s shares traded as low as 62¼p at the end of June ahead of Investec’s approach.

They closed 7½p higher at 90p on Tuesday, giving it a market capitalisation of £209m.

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