Huw Jones and Nichola Sainather

LONDON (Reuters] -On Thursday, Royal Bank of Canada made a 1.6 billion pound (2.1 billion USD) all-cash offer to Brewin Dolphin, a U.K.-based wealth management company (OTC):

It represented 62% more than Wednesday’s closing market price and sent target stock shares up 61%.

RBC Wealth Management, Canada’s largest bank, believes the UK is an important growth market.

RBC offers Brewin shareholders 515pence per share. This is compared to Wednesday’s closing prices of 318pence on Wednesday. The firm has been valued at 2.8% its 55 billion-pound assets under management (AUM), as of February 28.

Brewin’s shares reached a new record of 511 pence in 1445 GMT. This is more than double the previous month when they were at their lowest point for over a year. Royal Bank shares declined 0.1% compared to a 0.4% rise in Toronto stock benchmark.

The deal has been unanimously supported by the directors of Brewin Dolphin, RBC stated. It is anticipated that the agreement will be completed at the close of the third quarter.

Jefferies analyst wrote that the premium showed the “attractiveness” of the UK’s wealth market with stable income streams over the long term and potential growth.

It is higher than the 2.4% of AUM that rival Bank of Nova Scotia paid for Jarislowsky Fraser and the 2.2% that Toronto-Dominion Bank paid for Greystone Capital Management, both in 2018, said Kingwest & Co Portfolio Manager Anthony Visano.

Recent demand for these businesses has increased, as banks and asset mangers have bought wealth management and direct investment platforms. This allows them to reduce costs and use economies of scale.

RBC chief executive Dave McKay stated that the bank is in active dialogues regarding its pursuit of wealth and commercial businesses in America and Europe during its February earnings call.

Although the United States and Canada accounted for the largest portion of its total revenues, it’s wealth management unit made up 28%.

Canada’s Big Six banks have expanded beyond their native markets. They currently hold around 90% of the domestic market. RBC’s acquisition follows deals from TD to acquire First-Horizon Corp, and Bank of Montreal’s buy of Bank of the West both in the United States.

Lloyds Banking Group, LON: bought Wealth Management Platform Embark last year from Lloyds Banking Group. JPMorgan Chase bought Nutmeg (NYSE:) for 700 Million Pounds.

($1 = 0.7618 pounds)