Canaccord Genuity has agreed a deal to acquire Brooks Macdonald Asset Management.
For a total payment of up to £50.85m ($66.37m), which includes a starting account of £28m payable in cash upon completion (the “Disposal”), Brooks MacDonald Group and Canaccord Genuity Wealth (International) Holdings have signed a legally binding agreement for the sale of the former’s wholly owned subsidiary, Brooks Macdonald Asset Management (International) Limited and its subsidiaries (BMI).
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With regulatory permits pending, completion is anticipated by March 2025.
The transaction involves an initial consideration of £28m, which will be paid in cash upon completion. Additionally, there is a contingent consideration of up to £22.85m, payable in cash two years after completion. This contingent amount will depend on the revenue performance of the BMI business.
The proceeds from the disposal will be used to make focused investments in the Group’s core offerings, enhancing its ability to seize structural opportunities in the UK and pursue both organic growth and targeted mergers and acquisitions.
As of 30 June 2024, BMI had £2.3bn in Funds under Management (FUM). In the financial year 2024, BMI generated £19.9m in revenue and £3.3m in underlying profit before tax.
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By GlobalDataMoreover, on March 7, 2024, the group began the strategic review, which looked into a variety of BMI choices.
The Board determined that selling BMI is in the group’s optimal interest since it streamlines operations and allows the organisation to solely concentrate on its primary business of high-quality investment management and financial planning in the UK.
The proceeds of the disposal will enable the group to invest more strategically in its key offering and improve its capacity to capitalise on structural opportunities in the UK, both organically and through selective M&A. Additionally, the board’s agreement with Canaccord resulted in a favourable outcome for the company and its shareholders.
Furthermore, the deal also provides a highly reputable future owner for BMI, who has an established foothold in Crown Dependencies. The group will collaborate with Canaccord to enable an effortless shift for current BMI clients.
Canaccord will buy BMI with an agreed-upon level of regulatory capital, and any surplus will be paid for upon completion, and the group will incur £3-5m in separation and transitional arrangement costs, which will be classified as exceptional items in the current and ensuing fiscal years.
Andrea Montague, CEO Designate & chief financial officer of Brooks Macdonald, stated: “We are pleased to announce the sale of BMI to Canaccord as their presence and understanding of the local markets will provide a strong foundation for the future growth and development of the business. I would like to thank all our BMI colleagues for their commitment to their clients and professionalism. We wish them all the best for the future.”
David Esfandi, chief executive officer of Canaccord Genuity Wealth Management, added: “Brooks Macdonald International is a quality business and an excellent strategic fit for our international division. This is a mutually beneficial transaction that will cement Canaccord’s position as a fully-fledged integrated wealth manager. Both firms are well-established across the Crown Dependencies, and BMI will also add significant financial planning expertise in our international business. Canaccord has a robust and scalable operating platform with a proven track record of successfully integrating businesses, and we anticipate a smooth process for BMI in 2025.”
