Cazenove Group plc

20 Moorgate
London EC2R 6DA
United Kingdom
Telephone: ( + 44) 20 7588 2828
Fax: ( + 44) 20 7155 9000
Web site:

Private Company
Incorporated: 1954 as Casenove & Co.
Employees: 1,134
Sales: £292.9 million ($500 million) (2004 prorated)
NAIC: 523110 Investment Banking and Securities Dealing; 522293 International Trade Financing

Cazenove Group plc is one of the United Kingdom's oldest and most venerable investment bankers, providing capital management and equities and international market investment services to the country's elite. The company counts the Queen of England among its clients, as well as nearly half of the country's largest 100 companies. With a history reaching back to the early decades of the 19th century, Cazenove has been forced to undergo a sea-change at the beginning of the 21st century in order to remain a competitive banking force. Operated as a partnership for most of its more than 180 years, Cazenove converted to a corporation in 2001 and even toyed with the idea of going public. Instead, at the beginning of 2005, the company spun off its investment banking business into a joint venture with JPMorgan of the United States, creating JPMorgan Cazenove Holdings. In this way, JPMorgan achieved an entry into the dynamic London investment banking sector, while Cazenove obtained the deep pockets and career perspective capable of attracting the financial industry's top talents. Nonetheless, soon after the launch of the joint venture, the company announced the defection of three of its senior members. The agreement also gives JPMorgan the right to acquire full control of the joint venture as early as 2010. Cazenove traditionally conducts most of its operations from its London offices, and in the early 2000s the company closed a number of its overseas offices, notably in India and Australia. Cazenove maintains subsidiary offices in the United States, Germany, France, China, Hong Kong, and South Africa. The group posted turnover of £292.9 million ($500 million), prorated for the full year 2004 in order to align itself with JPMorgan's calendar year. Cazenove is led by chairman David Mayhew, who joined as a partner in 1968.

Huguenot Origins in the 18th Century

Cazenove's roots lay in the Huguenot exile, following the revocation of France's Edict of Nantes, which had established guarantees of religious freedom for the country's Protestants in 1685. Many Huguenots moved to Geneva, where they became leading financiers. By the late 18th century, the Huguenot population had begun to emigrate to other parts of Europe and to the United States. England, already the financial center of Europe, attracted many Huguenot banking families, notably the Cazenove family, led by James Casenove.

James Casenove's youngest son, Philip, was born in 1799 and entered the financial world in 1819, joining brother-in-law and fellow Huguenot John Menet at his brokerage. By 1823, Philip Casenove had become a partner in that business, marking the beginning of the late Cazenove Group. Menet died in 1835, and Cazenove then formed a partnership with Joseph Laurence and Charles Pearce.

In 1854, however, Philip Cazenove formed P. Cazenove & Co. in a partnership with his son and nephew. That partnership quickly rose to prominence, in large part because of its involvement in the financial side of the railroad industry. Yet a part of Philip Cazenove's success was also attributed to his relationship with the powerful Rothschild banking family, which served as a patron and later as a financial partner in many of Cazenove's transactions. In 1859, for example, Cazenove joined with the Rothschilds to act as a broker for the raising of capital for the San Paulo Railway Company.

In 1862, the company served another important client, acting as broker for the formation of the Bank of Hindustan. Cazenove's interests in India extended to the construction of the country's railroad industry. In the 1870s, the company served as broker for His Highness the Nizam's State Railway Company. In 1883, the company helped raise funding for the launch of the Bengal Central Flotilla Company, which operated a steamship service between Khoolna and Burrisaul. Closer to home, Cazenove's helped raise the funding for the Atlantic Telegraph Company, launched in 1863, and the Great Eastern Railway Company in 1868.

Through the end of the 19th century, Cazenove was involved in a number of exotic transactions, such as the issuing of land mortgage bonds in Russia in 1874, as well as the creation of the Metropolitan District Railway Company, which built the London Underground. The partnership's reputation as a preeminent investment banker was solidified when it acquired such prominent clients as the British royal family. Indeed, into the 21st century, the Queen of England remained a steadfast Cazenove client.

Weathering Railway Nationalization in the 1940s

Philip Cazenove died in 1880, leaving behind one of England's most important financial houses. The Cazenove family remained prominent members of the partnership through the 19th and 20th centuries, during which the firm continued to bring in new partners. One of the most important of these was Swainston Howeden Akroyd, who joined the partnership in 1889. Considered one of the "fathers" of the London Stock Exchange, Akroyd brought in his brother, as well as his name, to the partnership, which became known as Cazenove and Akroyd.

By then, Cazenove had already established its rather exclusive recruiting practices. Partners seemed more or less required to have attended elite schools such as Eton or Winchester and to have been members of the Brigade of Guards. The partnership also became famous for its embrace of formality and tradition, enforcing highly restrictive dress codes into the "casual dress" era of the 1990s and 2000s.

Cazenove made a number of acquisitions of other brokerage and private banking firms in the early decades of the 20th century. The partnership later extended its name to Cazenove Akroyds and Greenwood & Co. in order to reflect its expanded form. Much of Cazenove's financial success had been linked to its longstanding involvement in the British and worldwide railroad industry. Cazenove had played a prominent role in the development of the British railroads, which in turn were a major stimulant to the country's economic and industrial growth through the 19th century and into the 20th century. The British railroad system, like that of the American railroad industry, had been largely built up and controlled by private interests.

Into the 1940s, Cazenove's fortunes remained entwined with the railroad industry, notably with its involvement in the Butler-Henderson Great Western Railway, as well as its dealings in railway shares. Yet the outbreak of World War II, and the nationalization of Britain's railroad system, nearly spelled disaster for the Cazenove partnership. As the London Times pointed out in an article in 1968: "Before the war it was said that … if the railways disappeared, Cazenove would go bust. In fact, it has adapted itself so well since nationalization that it is more powerful than ever."

A big part of Cazenove's success lay in its ability to shift its operations from a focus on the railroad industry to an embrace of the wider corporate and financial markets. Known more simply as Casenove & Co. since a name change in 1954, the firm had succeeded in winning a number of new clients, such as the merchant bank Brown Shipley Holdings, formed in 1960. Cazenove also expanded into a number of international markets, such as the United States, where its subsidiary, Casenove Inc., became the first foreign company to list on the Pacific Coast Stock Exchange. In 1974, Cazenove opened an office in Hong Kong, its first in the fast-growing Asian markets. The company also added subsidiaries in Australia, India, Singapore, South Africa, and elsewhere into the 1980s.

Independent Survivor in the 21st Century

Cazenove emerged as a prominent partner in the Thatcher government's privatization drive of the early 1980s. That same government proved among the world's most aggressive in liberalizing and deregulating many of the country's industries. The British banking industry's turn came in 1986 with the launch of the so-called "Big Bang" that removed many of the restrictions on the banking sector, especially limitations barring banks from acquiring and operating their own brokerages. As a result, the late 1980s saw a flurry of mergers and acquisitions as the country's banks bought up many of Cazenove's rival brokers and assets managers. Other rivals formed mergers among themselves, then listed their shares on the stock exchange as part of an effort to expand their operations into the private banking sphere.

Key Dates:

Philip Cazenove joins brother-in-law John Menet's brokerage business.
Cazenove becomes a partner in Menet's firm.
After Menet's death, Casenove forms a partnership with Joseph Laurence and Charles Pierce.
Casenove sets up a new partnership, J. Casenove & Co., with his son and nephew.
The company becomes Casenove and Akroyd and later Casenove, Akroyd and Greenwood and Co.
The company changes its name to Casenove & Co.
Casenove & Co. joins a fund alliance with the Bank of Scotland, Norwich Union, Scottish Equitable, and Legal & General, among others.
The company converts from a partnership to a corporation, changing its name to The Casenove Group.
The company spins off its investment management arm into a joint venture with JPMorgan.

Cazenove, however, resisted these trends and instead remained steadfast in its tradition as an independent partnership. The firm was greatly aided by the impressive loyalty of its clients: by then the partnership counted nearly half of the country's top 100 firms among its client list. Cazenove nonetheless sought out allies in an effort to remain competitive in such areas requiring large-scale funds as the new issues underwriting market. Toward this end, the company joined an alliance formed in 1986 among such leading financial players as the Bank of Scotland, Norwich Union, Scottish Equitable, and Legal & General.

Cazenove, along with David Mayhew, then the head of the firm's institutional equity division, became embroiled in the Guinness fraud scandal of 1988, in which Cazenove was accused of aiding Guinness in a fraudulent share purchase during its takeover battle for Distillers in 1985. Mayhew never went to trial, however, and Casenove emerged relatively untarnished, benefiting from the continued loyalty of its client base.

While Cazenove remained committed to its independent status, it nonetheless found itself forced to move with the times during the 1990s. The increasing transparency of the London financial sector, accelerated by the arrival of large U.S. and other foreign banks as major players, began to cast Cazenove's traditional secrecy and refusal to speak to the press as, according to the Sunday Times, "sinister." The company also remained one of the few in its sector to refuse to publish its company research. However, Cazenove made an effort to modernize its product offering and expand its range of services, including the launch of a wing dedicated to emerging markets.

By the beginning of the 2000s, however, it had become clear that Cazenove would not be able to survive in its present condition, if only because of its increasing difficulty in attracting London's top financial talent to join its partnership. In 2001, therefore, Cazenove announced that it was converting its status from a partnership to a corporation, with its partners becoming its initial shareholders. The firm, now led by Mayhew as chairman, also announced its intention to go public. Cazenove also changed its name, becoming the Cazenove Group.

Nevertheless, by the end of that year, the company was forced to backpedal on the public offering due to weak market conditions. At the same time, Cazenove announced that it was shutting down its office in India and eliminating its emerging markets operation.

Cazenove broke with more than 180 years of tradition when it revealed its financial information with the release of its first annual report in 2002. The company surprised the investment community with its announcement that it intended to seek a listing on London's Alternative Investment Market (AIM). Yet by 2003, the company was forced to call off that listing as well.

Instead, in early 2004 Cazenove announced that it was putting itself up for sale and began accepting offers. The company's position as one of the British financial market's leading investment banks made it highly attractive, especially for foreign companies seeking entry into the United Kingdom. However, Cazenove was not quite ready to give up its independence. In November 2004, the company announced that it had reached an agreement with JPMorgan to form a new joint-venture company, JPMorgan Casenove Holdings. Under terms of the agreement, Casenove spun off its investment management arm into the joint venture, maintaining its equities and international capital markets operations under the still independent Casenove Group.

As part of the joint-venture agreement, JPMorgan was granted the option to acquire full control of JPMorgan Casenove as early as 2010. This arrangement enabled Casenove Group to preserve its independence and its long tradition of financial service to the cream of the United Kingdom's corporate and private community into the new century.

Principal Subsidiaries

Cazenove & Co. (Singapore) PTE. Limited; Cazenove & Co. Ltd; Cazenove AG (Germany); Cazenove Asia Limited (Hong Kong); Cazenove Capital; Cazenove Fund Management Limited; Cazenove Incorporated (USA); Cazenove International Holdings Limited; Cazenove Investment Fund Management Limited; Cazenove Service Company; Cazenove South Africa (PTY) Limited; JPMorgan Casenove Holdings.

Principal Competitors

3i Group Plc.; Aberdeen Asset Management PLC; AMVESCAP PLC; Barclays Plc; Close Brothers Plc; Singer and Friedlander Plc; Durlacher Corporation PLC; Old Mutual plc; Schroders plc; St. James's Place Capital; UBS Warburg.

Further Reading

Cattell, Brian, "Cazenove Aim: Preserve Name," Daily Deal , October 12, 2004.

Cave, Andrew, "Cazenove Breaks Its 180-year Secrecy Rule," Daily Telegraph , September 19, 2002, p. 1.

"Cazenove Closes India Operations," Business Line , November 30, 2001.

"Cazenove Group Is Changing the Name of Its Wholly-owned Unit Cazenove International Asset Management," Global Fund News , February 2005, p. 17.

"Cazenove's Last Act," Financial Times , May 26, 2004, p. 22.

Connon, Heather, "End of the affair for Cazenove," Observer , December 3, 2000, p. 7.

Davis, John, "Time to Unlock Cazenove's Treasure Chest of Goodies," Observer , May 12, 1996, p. 10.

Gapper, John, and Lina Saigol, "Cazenove Attempts to Resolve a Big Dilemma," Financial Times , May 29, 2004, p. 3.

Hamilton, Kirstie, "Changing Face of Cazenove," Sunday Times , February 13, 1994, p. 7.

Hobday, Nicola, "Cazenove Mulls Flotation on AIM," Daily Deal , August 20, 2002.

Kynaston, David, Cazenove & Co.: A History , London: B.T. Batsford: 1991.

McCrystal, Damien, "They May Not Have Degrees, But It Would Take a Very Dim-witted Cazenover Not to See That Cosy Would Be Coming to an End," Observer , July 7, 2002, p. 7.

Nisse, Jason, "Is Time Running Out for the City Gents?" Independent on Sunday , December 3, 2000, p. 5.

Pretzlik, Charles, "An Annual Report Like Anyone Else's," Financial Times , September 19, 2002, p. 22.

Saigol, Lina, "Cazenove Abandons Flotation Plan," Financial Times , January 29, 2003, p.1.

Wachman, Richard, "Mammon: Cazenove Uncloaked," Observer , September 22, 2002, p. 14.

Wendlandt, Astrid, "Cazenove Closes Emerging Arm," Financial Times , October 8, 2001, p. 30.

"Will Cazenove Be a Blushing Bride?" BusinessWeek , September 20, 2004.

—M. L. Cohen

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