Why the Schroder family sold up
The sale of the UK’s largest independent asset manager comes after the death of a patriarch and the rise of giant US funds
As a two-century-old story that has shaped British finance neared its end, Richard Oldfield swept his Beijing hotel room for spying devices.
It was January this year and Oldfield, who had become chief executive of Schroders just 14 months before, was seeking final backing from the founding family for the sale of the grand old City of London institution.
The consequences of a divestment of the UK’s largest independent asset manager would be profound.
The sale of Schroders would deprive the FTSE 100 of a stock that has been a constituent part of the index for most of the past four decades.
It would signal the end of the independence of one of the last great City names following the 20th-century demise of groups such as Barings Bank, Morgan Grenfell and Mercury Asset Management.
And it would herald broader shifts in asset management — in particular, the gravitational pull of the US — and the challenge for family-owned firms in a world in which margins can be low and the need for capital ever greater.
“If someone the size and scale of Schroders concludes it is not big enough, then what does this mean for the many smaller players?” says Richard Buxton, a former Schroders fund manager. “It’s almost inevitable that there will be further deals in the industry to come.”
Ultimately Schroders’ fate was a family decision, one that would reap more than £4bn for the descendants of Johann Heinrich Schröder, the Hanseatic German who founded the firm in 1804.
As of January, the group’s 12-person board — including two family members — had already approved a £9.9bn offer by Nuveen, a Chicago-based asset manager, that would keep the Schroders brand and retain its London office as the combined company’s international headquarters.
But the broader Schroder family had not seen the offer from Nuveen. Between them, they hold a 42 per cent stake.
When the family assembled at the London offices of the Slaughter and May law firm in January, Oldfield, previously a 30-year veteran at PwC, was out of town. He was on a trip to Beijing as part of a business delegation accompanying Sir Keir Starmer, the British prime minister.
Before joining the meeting via video, he had to make a special effort to make sure the call was secure. He says family members were “confronted with a question they were not expecting . . . It was a bit of a shock.”
Claire Fitzalan Howard, the 65-year-old who is one of two family members who served on the board, says Schroders “wasn’t for sale”.
But, in a rare interview, she adds: “When Nuveen appeared with this approach, it was definitely worthy of serious consideration.”
It took just two more meetings — and about six weeks — for the family to sign off on the sale of the 222-year-old firm. Rather than retaining a stake in the group, they will sell out entirely.
When asked why they did not plan to keep a stake in the firm, Leonie Schroder, 52, the other family member on the board, says: “It was never part of the offer.”
Going shopping
Although Schroders topped Nuveen’s list of targets, other companies were also on its radar. Nuveen CEO William Huffman was interested in Axa Investment Managers before it was acquired by BNP Paribas in 2025.
He had also shown interest in HSBC Asset Management, Aegon and Aberdeen Group, as his group looked beyond its core US market, says a person close to the situation.
“In our industry, scale matters,” Huffman says. “Nuveen is a $1.4tn firm and our next step was to accelerate our globalisation, which is why we’ve been evaluating acquisition targets for a few years.”
As for Schroders, many industry veterans say it had signalled its interest in a deal, even if Nuveen, which is owned by the US’s mutual Teachers Insurance and Annuity Association of America, had not initially featured among the likeliest buyers.
Despite its strong market share in the UK, Europe and Asia, Schroders’ core business of mutual funds had come under pressure in an era characterised by the rise of index-tracking funds and the relative decline of the London Stock Exchange.
It was neither able to offer the specialities of some smaller UK groups nor the sheer scale of US rivals that have benefited from the tech-powered boom in American shares.
In the three years before Oldfield took charge in 2024, the stock had fallen by about 50 per cent as customers pulled out billions of pounds from its funds. “Margins are under pressure in the industry,” he says, seeking to explain the rationale of the transaction. “When you have scale, you can reinvest.”
Scale was what was lacking.
Until the 2007-2008 financial crisis, the assets managed by Schroders and other European investment groups, such as Axa IM and DWS, had grown at rates comparable to their US rivals.
Today its £800bn ($1tn) tally of assets under management is dwarfed by US giants. BlackRock boasts nearly $14tn of assets, while Vanguard oversees about $12tn.
The group was coming to the view that it needed to be part of what bankers were calling the $2tn club, and become an institution with enough assets to absorb the cost of doing business and turn decent profits.
“That sense of how do you achieve real scale is why this acquisition [with Nuveen] makes very good sense,” says an industry veteran. “It was never going to be possible by buying things.”
Although Oldfield says he was not brought in with an instruction to sell the business, he was given a mandate from the board to cut costs.
Indeed, other people close to the company maintain that he was appointed to do a deal and Oldfield held coffee meetings with counterparts from groups such as HSBC and Franklin Templeton to discuss industry pressures and possible co-operation.
As he worked through his contacts list, Amy Jo Pitts at Wells Fargo, who would later be formally appointed to advise on the deal, put him in touch with Huffman.
That led to two meetings in July and October last year — and ultimately to the family’s approval and 99.9 per cent backing for the deal by shareholders in a vote last month.
The transaction, which according to Morningstar will put the combined firm among the top 10 in its sector globally, with $2.5tn under management, is due to complete towards the end of the year.
In the meantime, other UK and European asset managers may now be prey to similar pressures to scale up or bail out.
Listed UK firms such as Aberdeen Group and M&G have had struggles of their own, grappling with customers pulling their money from stock picker-led funds, while slashing costs, pivoting to private assets and attempting to build sufficient scale.
According to a recent report by Bruegel, a Brussels-based think-tank, nearly half of European assets are now run by US firms.
Robert Colthorpe, a corporate finance banker, says that, following the Schroders sale, London, once “very much the centre for investment management” now risks “becoming a hub of the US market, rather than a leader in our own right”.
He adds: “Schroders is clearly the pre-eminent listed investment business, with a profile that’s transcended generations, and to lose that to US ownership is a real blow.”
Death of a patriarch
Those close to the family say that Bruno Schroder, the patriarch who sat on the company’s board for almost six decades, would never have allowed a sale.
Bruno was a legendary figure at Schroders, where he worked as an executive for three years before becoming a director in 1963.
A pilot, he would fly his own aeroplane both to his Scottish estate as well as to the firm’s branches across the world. The unquestioned voice of the Schroder clan, he was so attached to the firm that he would walk the office floor — where non-executives rarely ventured at the time — as Christmas approached.
“Bruno was adamant that there would never be a sale of the family silver,” says one industry veteran.
Others agree that the Schroders of that era was defined by its family ownership.
Rae Maile, a veteran analyst in London, adds that the group presented a “case study for long-term management and careful stewardship . . . in a time when attention spans have shrunk”.
That view is shared by Michael Dobson, the former chief executive who piloted the company from its first annual loss in 2001 to £589mn in profits in his last year in that role in 2015.
“In terms of turning Schroders around during difficult times, such as the global financial crisis, it was advantageous having the family backing, as long-term shareholders,” he says. “I’m sure without the family shareholding it would have been taken over before.”
But in 2019 Bruno died at the age of 86 and divisions appeared to emerge within the family as its interests fractured across three generations.
One insider said that “you went from one very coherent ex-employee who represented the daily interests of the family on the board to several people who . . . represented other strands of the family”.
Leonie Schroder, who as Bruno’s daughter took his place on the board, says the business “is something immensely precious to us all as a family”.
Some of the new generation appeared to be less rooted in Schroders than Bruno had been.
Fitzalan Howard, who had previously worked at the merchant bank Kleinwort Benson, replaced her brother Philip Mallinckrodt on the board after he left the firm in 2020. He had served as a non-executive director for three years and, before that, as head of private assets and wealth management. Two other siblings, Edward and Sophie Mallinckrodt, are a tech entrepreneur and a top barrister respectively.
Amid such changes in the family personnel, the business was coming under pressure.
Costs had risen under Peter Harrison, Oldfield’s predecessor as chief executive, who made a series of what critics said were expensive deals to access the fast-growing area of private markets.
Harrison contends that the old world of making money from managing equities was ending, and the company “needed to be more relevant to clients and that meant acquiring in private markets, wealth and solutions . . . the areas of growth in an industry that was struggling to grow”.
Others say that the acquired businesses were never fully integrated, leaving Schroders with a hodgepodge of sub-scale private markets firms bolted on to the core business and sales teams pulled in different directions.
The group’s travails were also the result of broader, longer-term trends.
British pension schemes — once Schroders’ core client base — have pulled money from UK equities over the past two decades, weighing on the stock market and investment groups’ own share prices. That contrasts with US asset managers’ deep capital pool.
Over 10 years, investors across the world have also pulled away from managed funds of the sort that have long been Schroders’ stock in trade to lower-cost “passive” index trackers and exchange traded funds. US giants including BlackRock and Vanguard were early adopters of index trackers and are now the world’s two largest fund groups, each overseeing more than $10tn.
Low fees mean smaller profit margins. BlackRock and its peers have also piled into private assets in order to sell such products with bigger charges.
That has presented European asset managers with a threefold problem.
Selling index funds is a low-margin business requiring scale; private markets involve costly acquisitions and expertise; and accessing the capital necessary is largely dependent on cracking the US market.
For Schroders, and especially the founding family, this was a particular challenge.
It looked at buying another British group for a while as a means of scaling up — but in 2021 it abandoned a plan to acquire the asset management business of its smaller rival M&G, to create a £1tn fund group.
People close to the family say that they did not have any more capital to inject into the business to make an acquisition of a sufficient size. But nor did they want to do a rights issue to raise more money and dilute their own stake.
“Pressure on the industry and scale are obviously things we’re very aware of and have the privilege of being very well informed on,” says Fitzalan Howard. “So that has been definitely part of our perspective in considering the Nuveen approach.”
Another industry expert says that some family members were keener on retaining Schroders than others, noting some clashes: “It was the best thing for everybody to part ways — with the cash.”
One person close to the firm says they would have expected a domestic acquirer such as HSBC since “Schroders was a strong brand and platform for people keen to expand in the UK”.
“At some point we thought there could be a counter-offer,” the person adds. “But the family had signed an irrevocable commitment to sell.”
Selling up
The sale of the renowned British institution to a US group has echoes of an earlier deal involving Schroders itself.
In 2000 it agreed to sell its investment bank to Salomon Smith Barney, part of Citigroup, for £1.35bn, in what people close to Bruno Schröder say was a heart-rending moment for him.
The firm’s roots go back to merchant banking and to the first half of the 19th century, when Johann Heinrich Schröder financed cotton and sugar shipments.
Over the decades, the bank grew, its history entwined with that of the City and of the broader British economy, underwriting much of the country’s trade with the rest of the world. Even as Schroders became one of Europe’s leading asset managers, it still prided itself on the bank.
“Bruno’s father said to him ‘never sell the bank’,” says Buxton, the former fund manager. “So it was very emotional when he had to sell it to Salomon Smith Barney.”
A person close to Schroders says that the reasons for the sale of the investment bank then and those for the asset manager today are “the same . . . Can’t crack America, need to buy in America, but haven’t got the money . . . so sell to a big American.”
A Schroders insider adds: “At the end of the day, it’s not a merger deal, it’s a takeover,” and puts the likelihood of redundancies at 50 per cent.
Schroders and Nuveen say there will be no “material” job cuts in the two years after the deal completes, other than those already announced.
Another Schroders veteran adds they would be “amazed” if Cazenove, the wealth manager the group has said it would retain, “is not sold in the next 12-18 months” and equally surprised if the Schroders “brand is still here in five to 10 years”.
Other deals in the sector are already in the works. Nelson Peltz’s Trian is part of a group of investors acquiring British American asset manager Janus Henderson. Competitors are taking note of the £9.9bn netted by Schroders shareholders.
“It’s probably the best thing they could have done,” says a rival senior executive. “It’s not a bad price. The rest of us with similar asset management businesses are asking, if Schroders can’t make it work as an independent player, then who can?”