Cazenove has a reputation for being able to discern the mood of the market better than almost all others. The blue-blooded stockbroker has now earned that accolade beyond all doubt.

Five years ago Cazenove shocked the City by entering a joint venture with JP Morgan under a deal that saw the Wall Street bank agree to buy half of the broker then and half next year.

That gamble has paid off handsomely for Cazenove. JP Morgan paid £700 million in 2004 for 50 per cent of the broker. Despite the financial crisis of the past two years, Cazenove’s value has surged in the intervening period and the price tag for the remaining half is set to be close to £1 billion.

A deal to bring the joint venture — known as JP Morgan Cazenove — fully within the JP Morgan fold is expected within the next few weeks. The American bank may be paying about 500p to 525p a share.

It will be a huge pay day for Cazenove’s employees, who own shares from its days as a partnership before its incorporation in 2001, and from new stock handed out since then. About 1,500 own shares, but more than half of the firm is owned by about 80 senior individuals, with 25 per cent owned by other staff and 10 per cent held by institutions.

David Mayhew, Cazenove’s chairman, is set to make almost £20 million for his shares. Michael Power, finance director, is in line for about £11 million. Alan Carruthers, the head of equities, may make about £6 million, One bit of bad luck for Cazenove is that the payouts will come just as the Government is clamping down on large City bonuses. The broker will argue — very probably successfully — that it has been an exemplary case of how regulators and politicians want businesses to be run.

Distributions to Cazenove staff are for years of building up the business and many of the individuals concerned have held their shares for decades. In a lot of cases, the payments will far eclipse the annual bonuses paid out by Cazenove, which has a reputation for being careful with its purse strings.

The joint venture with JP Morgan has not always gone smoothly. Conceived as a way to marry the American bank’s balance sheet might with Cazenove’s City connections, there were suspicions on both sides and in the early days a string of FTSE 100 clients abandoned the company.

Robert Pickering, the Cazenove banker appointed to lead the operation, left suddenly last year. He was replaced by Naguib Kheraj, the former finance director of Barclays, who began his career with Salomon Brothers. Mr Kheraj is expected to get a significant windfall from the buyout by JP Morgan.

While other financial firms have almost collapsed in the past two years, Cazenove has flourished. Many companies that have needed to raise money from investors have turned to Cazenove to steer them through the process. At the same time, because of JP Morgan’s balance sheet, the business has also been able to underwrite several of the capital raisings.

Neither JP Morgan nor Cazenove would comment on the negotiations, which they are seeking to conclude before February. According to the original deal, at that point Cazenove has the right to sell its remaining half and JP Morgan has the right to buy it.

Although the joint venture is now widely hailed as a success, there are many questions about the future. JP Morgan does not have a separate investment banking operation in the UK and so there is little risk of a jobs bloodbath. However, both businesses have equities teams, which will have to learn to work together. Some also wonder whether Mr Kheraj may consider external job offers once he has seen through the integration. Alternatively, there may be a bigger role for him within JP Morgan, especially as the bank recently ousted Bill Winters, co-head of its global investment bank.

The payouts to Cazenove staff will split roughly 50-50 between present employees and former staff.

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