Investec pips Canaccord to buy Evolution for £220m

The Telegraph understands that Investec will pip rival bidder Canaccord to the business, offering in excess of £1-a-share for the City broker.

Shares in Evolution closed up 3 at 94p on Thursday night, valuing the broker at £218m.

Although not a significant premium to the current price, it will mark a substantial premium to the 73½p at which Evolution's shares closed on August 2, the night before the company's board first admitted it had received a bid approach.

Although it is expected that the deal will be revealed to investors in both banks on Friday morning, it is possible there may be some slippage in the timing of the announcement.

Banking sources indicated that in the past week, the lead position had changed a number of times, with Toronto-quoted Canaccord – which has a market value of C$814m (£515m) – ahead on price as recently as Wednesday.

However, Investec, which is capitalised at £3.43bn and has significantly deeper pockets, topped Canaccord's suggested offer as recently as Thursday morning.

Investec is known to covet Williams de Broe, Evolution's $8bn-strong asset management business led by Philip Howell, and is ready to fold the funds into its existing asset management arm.

However, the future of Evolution Securities, the small and mid-cap brokerage run by Evolution group chief executive Alex Snow, is less clear, given it is an area in which Investec has no current experience.

The sale comes after a busy five weeks for Evolution, after the departure of finance director Andrew Westenberger and the return of Lord MacLaurin, the former Vodafone chairman, to the board.

It also comes after Evolution acquired £1.8bn of assets from BNP Paribas, and following revelations in The Telegraph that Mr Howell is working on a second acquisition to take Williams de Broe's assets under management to £10bn.

Investec first emerged as a bidder for Evolution at the start of August, with Canaccord being named in mid-August.

Before the pair appeared, however, Mr Snow had tried a number of strategies to bolster the business, including a failed acquisition of Panmure Gordon last October.

It also opened a Chinese venture, bringing in Hong Kong-based investor Victor Chu, of First Eastern Investment Group, in 2009.

Evolution began life as dotcom darling Evestment in 1999, under the leadership of Oliver Vaughan, raising £40m at the top of the technology bubble to invest in private equity opportunities.

But it was with the arrival of Mr Snow, a former Credit Suisse equities salesman and Harlequins lock-forward, that it quickly shifted its focus to financial services, buying Christows in April 2000 and merging with broker Beeson Gregory in 2002.

In July 2006 the business stepped up a gear, buying Williams de Broe and subsequently giving it assets under management of more than £2.2bn.

Mr Snow's 2.42pc stake is likely to be valued at £5.28m as a result of the sale.

Last night, after The Telegraph broke the news, Canaccord issued a short statement confirming it had pulled out of the bidding for Evolution.

Spokesmen for Evolution and Investec all declined to comment.