Close Brothers Group has agreed to sell its wealth management business, Close Brothers Asset Management (CBAM), to funds managed by Oaktree Capital Management for an equity value of up to £200m.
In a statement today (19 September) Close Brothers said the equity value includes £28m of contingent deferred consideration in the form of preference shares, represents a multiple of 27 times CBAM’s statutory operating profit after tax for the 2024 financial year.
Close Brothers intends to retain all upfront cash proceeds from the transaction of approximately £172m, further stating that the deal would strengthen the group’s capital base and improve its position to navigate the current uncertain environment.
The sale is expected to complete in early 2025 calendar year and is conditional upon receipt of certain customary regulatory approvals
Mike Biggs (pictured), Close Brothers’ chairman, said: “Following a comprehensive strategic review, the Board is pleased to announce the agreed sale of CBAM to Oaktree. The transaction is expected to increase the group’s common equity tier 1 capital ratio by approximately 100 basis points, marking significant progress towards the plan we outlined in March 2024 to strengthen our capital base.
“The Board has unanimously approved the transaction and believes that the agreed sale represents competitive value for our shareholders, allowing us to simplify the group and focus on our core lending business. CBAM has delivered impressive growth over the past years and has developed into a strong franchise.
“Under the new ownership, it will benefit from additional resources to accelerate its growth trajectory. I would like to thank ourCBAM colleagues for their dedication, professionalism and exceptional service to our clients.”
Federico Alvarez-Demalde, Oaktree managing director said: “We are delighted that Close Brothers chose to partner with us on this important transaction. We have observed CBAM’s progress over several years and hold the franchise in high regard. The business is well known for its client centric culture which we absolutely intend to preserve and nurture as we invest in its service capabilities and technology to build a vertically integrated UK wealth business of scale.
“In the coming months we will bring to bear our extensive operational experience in the sector to work closely with Close Brothers and ensure a successful separation and transition of the business.”
