On first acquaintance the news that Cazenove Capital, Schroder’s UK based wealth management flagship, is to acquire Sandaire, the London-based private investment office established by Alex Scott in 1996, comes as a surprise.

After all, the reason that Mr Scott decided to establish Sandaire was because he couldn’t find any existing UK-based wealth management institution that met the standards he required to manage the Scott family fortune following the £300 million purchase of the Provincial Insurance Company, the Scott family business, by UAP in 1994.

Moreover, having made the decision to establish Sandaire, Mr Scott quickly became something of a family office evangangalist.

He was a regular speaker on the subject at wealth management conferences both in the UK and elsewhere.

Indeed Sandaire became a pivotal member of the Wigmore Association*, an international association of family offices that collaborated on a number of subjects of mutual interest such as research on investment managers, investment strategies and products.

Other members of the Wigmore Association include HQ Trust (Germany), Mutual Trust (Australia), Northwood Family Office (Canada), Pitcairn (US), Progeny 3 (US), PromeCap (Mexico) and Turim (Brazil).

Granted Sandaire has experienced a number of hiccups along the way, not least in the aftermath of its purchase of Lord North Street in 2014.

But under Warwick Newbury and James Fleming, who became chairman and chief executive respectively in 2017 the situation has stabilised both in terms of clients and assets under management.

Warwick Newbury and James Fleming

It may not have been a great money earner for the Scott family, at least until the arrival of Cazenove. But it has almost certainly done more than merely wash its face both for its owners and clients.

So why the decision to forego independence and become part of Cazenove?

The likelihood is that Mr Scott received an offer he couldn’t refuse from Cazenove/Schroders.

A Schroders source has confirmed that Sandaire had been on the firm’s radar screen for some time and that it had initiated merger talks at the beginning of 2020.

Sandaire certainly ticks most of the boxes as far as Schroders' and, in particular, Cazenove’s wealth management strategy is concerned.

Cazenove has become increasingly prominent in the very rich segment of the UK wealth management sector.

According to the presentation that accompanied Schroders full-year results private client portfolios worth more than £50 million accounted for 31 percent, or £20.6 billion of the £66.7 billion of assets that it oversaw for wealth management clients at the end of 2019.

Most, if not all, of these would almost certainly have been overseen by Cazenove. In other words very rich clients could have accounted for around £60 percent of the £35 billion Cazenove managed at the end of June 2020.

This would certainly have provided the substance to the claim made on a number of occasions by Andrew Ross, a former Cazenove chief executive and Schroder’s current vice chairman of wealth management, that the firm is the largest London-based multi-family office that no one has heard of.

In recent years Cazenove's focus on the very rich and family office market segments has become more explicit. The announcement of the appointment of Paul Drechsler and Charlie Porter as new Cazenove independent non-executive directors earlier in September was replete with references to family businesses, the very rich and family offices.

Sandaire provides Cazenove with all this and more.

Mr Scott’s arrival as putative chairman of Schroders global family services will certainly reinforce the firm’s substantial credentials in this segment both in the UK and the rest of the world.

He is very well connected and in addition to his family interests currently chairs the Wheatsheath Group, one of the three main components of the Duke of Westminster’s Grosvenor Estate, another family office.

The Wigmore Association will have provided useful international contacts.

What will be interesting going forward is the price paid by Schroders for Sandaire and the number of staff that will move to Cazenove.

The likelihood is, given the aftermath of the C.Hoare wealth management transaction, is that this will be substantial in order to maintain client continuity.

At the end of 2018 Sandaire employed 42 people according to its most recent published annual report and accounts.

It had £2.2 billion of clients funds under management at the end of June 2020.

*Sandaire is headquartered at 105 Wigmore Street, London.