Kingswood has completed the acquisition of Yorkshire-headquartered Sterling Trust Financial Consulting, an IFA business which operates from Hull and four satellite offices in Darlington, Newcastle, Sheffield and York.
This comes after International Adviser spoke to the firm about its plans in January 2020.
Sterling Trust provides financial advice to individuals and corporates across the UK, and currently employs 48 people, including 22 IFAs advising and managing £1.2bn ($1.49bn, €1.33bn) assets under management on behalf of around 5,000 clients.
The company was founded by Jeff Grantham.
Advisers will continue to receive operational support and supervision from within the existing office network, with Kingswood centrally managing regulatory and compliance, finance, HR and IT responsibilities.”
Pipeline
Gary Wilder, group chief executive at Kingswood, said: “This is a transformative transaction for the Kingswood Group, doubling our wealth advisory business and providing us with an opportunity to own a profitable regional financial planning business with built-in expertise and capacity to expand.
“There is also a major opportunity over time to migrate existing and new clients to Kingwood’s extensive and growing range of managed investment solutions on our DFM platform, underpinning the value of a fully integrated wealth and investment management business.
“We have a robust pipeline of further acquisition opportunities in the UK and US that we are reviewing; and we have three transactions under exclusive due diligence in the UK.”
Finances
The business has been acquired for a cash consideration of £17.75m, payable over a 3-year period.
Some £7.25m was paid at closing and the balance will be paid on a deferred basis subject to Sterling Trust meeting pre-agreed clauses over a 3-year year period, with the final deferred payment due in June 2023.
An additional deferred payment of maximum £1.78m is payable over the 3-year period, subject to targets achieved over that period.
Funding
In September 2019, the UK wealth firm raised an investment of up to £80m, by issuing irredeemable convertible preference shares to some investors and funds of investment manager Pollen Street Capital.
The acquisition has been funded by Kingswood’s issue of a total of 7,770,000 new convertible preference shares, under the terms of its convertible preference share subscription agreement with HSQ Investment, a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street Capital.
