The deal is being seen by some as a bit of a reverse takeover as Rothschild people will have the key roles within the new organisation.
It will be independently managed and headed up by RAAM chief executive, Peter Martin, who will report to a senior Westpac executive.
The business will trade under the Rothschild name for three months then be rebranded.
Earlier this year Rothschild announced it was looking for an equity partner to provide capital to expand its business. The deal announced yesterday goes further than that as the business has been sold outright.
Westpac says the deal will strengthen its distribution capability and give it entry to the independent financial adviser distribution network, including Rothschild’s Premier Adviser Service, comprising over 1000 independent financial advisers, as well as Westpac’s 765 financial advisers and planners.
Westpac also gets a highly rated funds management organisation.
"We will deliver to the existing client base a broader and deeper range of wealth management products and services. In particular, initiatives under consideration include capital protected growth products and diversified fixed interest products," Rothschild's Peter Martin says.
The timing of the deal is interesting as it comes hard on the heels of the ANZ/ING joint venture.
That deal has caused much speculation in New Zealand, as WestpacTrust contracts its funds management business to ING. Few people believe that ANZ will be happy that the joint venture, which it has a 49% stake in, manages money for a competing bank.
One possible option now is that WestpacTrust's money is managed by Rothschild.
Spokesmen for Westpac and Rothschild in Australia had no idea yesterday what impact the deal will have in New Zealand.
Currently Rothschild manage Australian assets, and contract international equities to US group Putnam, while Grosvenor Capital Management manage its hedge funds business.
Rothschild says that it will soon be announcing a new deal with other managers to run international fixed interest assets and listed property trusts.
The new organisation will be the fifth largest retail funds manager in Australia (with A$17 billion of retail FUM) and eighth largest overall (with A$34 billion of total FUM).
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