Evolution Group approached by unnamed potential bidder

The sector has been weakened by a slump in financial markets, which has led to more mergers and acquisitions.

Evolution did not identify the potential buyer but its shares rose yesterday following the announcement.

“This approach is at a very early stage and the board is far from certain that it will ultimately result in an offer being made,” Evolution said in a statement, urging shareholders to give it time to evaluate the approach before taking any action.

American investment bank Evercore Partners bought UK advisory firm Lexicon Partners in June, while in February 2010 Portugal’s Banco Espirito Santo bought a majority stake in British stockbroker Execution Noble.

Brokerage Peel Hunt said private equity or overseas companies could be interested in Evolution, and added a bidder might have to pay more than 86p per share.

“In respect of securities and wealth management, the markets are fragmented with the increasing burden of regulation and more onerous capital requirements, pointing to a requirement for consolidation, so an in-sector deal would appear highly credible,” Peel Hunt said in a research note.

Oriel Securities said in a research note that there was market speculation of an un-named French bank looking at Evolution.

It added that Evolution’s most attractive asset was its Williams de Broë wealth management division, not its investment banking arm.

Williams de Broë, which dates from 1869, has become one of the UK’s biggest firms of investment managers.

Evolution has also been on the lookout for takeovers.

It called off talks to buy rival Panmure Gordon last year but has been in advanced talks over the past month to boost its wealth management arm by acquiring BNP Paribas Private Investment Management.

Alex Snow, the group chief executive officer, joined Evolution in May 2000.

His previous career included spells with CSFB and BZW in the equity sales, trading and capital markets areas.

Last month, Evolution Group’s finance director issued a warning about global financial markets.

“It’s pretty awful at the moment. We see it as being awful for some time to come, in terms of liquidity and risk appetite, ” Andrew Westenberger said on July 29.

Markets have slumped in recent weeks on concerns over the European and United States sovereign debt crises.

However, Evolution said it was well placed to ride out the turbulence by continuing to focus on tight cost controls.

In July, Evolution posted a slight rise in first-half profits, with profits for the six months ending June rising to £4.3m from £3m a year earlier.

The Evolution Group’s Leeds office has four staff.

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