Kingswood acquires Californian wealth management firm
Wealth management company Kingswood Group has completed its acquisition of California-based wealth management firm and brokerage Chalice, and has signed "conditional heads of terms" to assume majority ownership in Manhattan Harbor Capital, which will see it running £1.6bn of assets in the US.
Kingswood, which first announced the plans in December 2019, will be purchasing an 85% interest in both Chalice Capital Partners (an independent broker/dealer) and Chalice Wealth Advisors.
The remaining Chalice shareholder has exercised their put option over their remaining 15% stake in the company, so the firm is now wholly owned by Kingswood. Chalice currently manages $1.1bn of assets - or £0.9bn, across the US.
Manhattan Harbor Capital will subsequently be renamed Kingswood US and will mean Kingswood will own and operate key offices in New York, Atlanta and San Diego."
The 'initial consideration' purchase price of £0.8m and the second tranche of £0.8m have already been paid by Kingswood - the latter of which was financed through the issuance of 869,000 convertible preference shares. However the maximum remaining balance of £1.6m will be "disbursed on a deferred basis in 2020 subject to Chalice meeting pre-agreed asset migration, revenue and EBITDA hurdles," according to the firm.
The pending majority ownership of Manhattan Harbor Capital (which is subject to due diligence and regulatory approval) will increase Kingswood's interest in the company from an existing 7% to 20%, although Chalice will be folded into Manhattan, increasing Kingswood's stake in the company to 50.2%.
Manhattan Harbor Capital will subsequently be renamed Kingswood US and will mean Kingswood will own and operate key offices in New York, Atlanta and San Diego.
The changes will see president of the Chalice platform Derek Bruton become CEO of Kingswood US and partner with majority owner of Manhattan Harbor Capital Mike Nessim.
Gary Wilder, group CEO at Kingswood, said: "We are delighted to welcome Derek Bruton and Mike Nessim along with their teams to the Kingswood group.
"The heads of terms to acquire a majority interest in MHC at an attractive discount relative to market reflects the desire of both parties to develop a highly accretive global platform providing clients access to investment product and services in major US and UK markets.
"The investment will provide a significant base to potential further integration and a valuable support to Kingswood's US expansion plans. This puts us in a strong position to execute our robust US acquisition pipeline and Mike and his team will oversee acquired entities and focus on delivering Kingswood's full service brokerage and banking proposition to clients."
Kingswood has made a number of acquisitions recently, including the purchase of Sheffield-based financial planning business WFI financial in September 2019, which doubled the firm's wealth operation and increased its assets under management to £2.5bn.
Subscribe to International Investment's free, twice-daily, newsletter
More on M&As
