Ø Kingswood takes another giant step in US expansion strategy
Ø Definitive agreement to acquire majority 50.1% interest in Manhattan Harbor Capital
Ø Manhattan Harbor Capital to be renamed Kingswood US
Ø Funded the first deferred consideration payment for Chalice, the business is to be folded into Kingswood US, subject to regulatory approval
Ø Up to $8.0 million (£6.1 million) additional capital to be invested to support further substantial US organic growth
NEW YORK, NY – (NewMediaWire) – September 25, 2020 – On 5 May 2020, Kingswood Holdings Limited (AIM: KWG) announced the formal closing of its acquisition of Chalice Capital Partners and Chalice Wealth Advisors (together “Chalice”), the planned increase in Kingswood’s interest in Manhattan Harbor Capital (“MHC”) from 7% to 20%, and the plan to contemporaneously fold Chalice into MHC, increasing Kingswood’s interest in MHC to above 50%.
Kingswood today announces that, subject to regulatory approval, it will achieve this majority ownership in MHC.
This will be achieved by acquiring a further 4% of MHC prior to the fold in of Chalice, taking the pre-combination holding to 24%. Kingswood has then agreed to contribute its existing Chalice platform (with its businesses now renamed Kingswood Capital Partners and Kingswood Wealth Advisors) into MHC at a valuation of $4.0 million (£3.1 million). This is subject to FINRA regulatory approval. A minimum of $1.1m (£0.8 million) additional capital will be funded into MHC at closing taking Kingswood’s interest to 50.1%.
MHC will be rebranded Kingswood US and provides the Group with a strong, robust and well-capitalised foundation to accelerate its US growth strategy including best in class, full service operational and technology infrastructure.
The Company intends to contribute up to $8.0 million (£6.1 million) of additional growth equity to further build US distribution channels through active adviser recruitment and acquisitions. If all capital is approved and fully deployed, the Kingswood Group is projected to own approximately 67% of the integrated Kingswood US financial services platform.
Kingswood US comprises strong Independent Broker Dealer (“IBD”) and Registered Investment Adviser (“RIA”) businesses across the US with key hubs in Atlanta, New York and San Diego. In addition it incorporates Kingswood Capital Markets, a national Investment Banking platform now supported by significant regulatory capital to leverage our expanding distribution channels and drive growth across equity and debt advisory, capital raising and M&A.
Gary Wilder, Group CEO at Kingswood, commented: “We are absolutely delighted to increase our investment and finalise agreements to acquire a majority interest in the re-named Kingswood US. Mike and his team have continually shown that they are highly talented, best in class operators in the IBD, RIA space and the recently formed full-service Investment banking business, Kingswood Capital Markets. We intend to grow this business substantially, leveraging our growing US distribution franchise. I have no doubt the capital we deploy will drive exceptional organic growth across the Kingswood US platform. This reflects the desire of both parties to develop a highly accretive global platform providing clients access to investment products and services in major US and UK markets.
Kingswood’s enhanced investment in Kingswood US will further cement a key, strategic foothold in the largest global wealth and investment management market, differentiate us from our peers and support our aspirations of asset linking and cross-selling services. This investment and intention to fund further growth equity is a major statement of intent regarding our US expansion plans and puts us in a strong position to execute our US strategy, supported by the in-place, operating and management platform. Mike and his team will oversee acquired entities and focus on delivering Kingswood US’s full-service brokerage, investment advisory and investment banking proposition to clients. Combined with Derek Bruton, who joined our US business with the Chalice acquisition, we now have considerable industry knowledge and experience to deliver a successful US outcome for the Kingswood Group and I’m greatly looking forward to working with them.”
Mike Nessim, Managing Partner of Kingswood US, added: “This partnership with the Kingswood listed entity is beneficial in so many ways, and a major advantage in my strategy to boost AUM, accelerate adviser recruitment, continue to substantially build our investment banking business nationwide and achieve a significant foothold in the largest wealth management market globally. I am incredibly excited to be partnering with the Kingswood Group and exploring the many opportunities for our integrated broker dealer, advisory and investment banking platform. The potential is enormous, and we now have the backing to deliver the next phase of our ambitious business plan.”
Derek Bruton, CEO of Kingswood US Holdings, said:“We’re delighted to announce Kingswood’s additional investment in Kingswood US. The contribution of Kingswood Wealth Advisors and Kingswood Capital Partners and the additional capital commitment provides us with a strong, robust national platform to grow and expand. We now have the advantage of major hubs in Atlanta, New York and San Diego operating under a centralised framework and a strong management team with significant experience in roll-up and consolidation strategies, which further reinforces the Group’s ability to grow global distribution channels for its dynamic wealth management platform.”
Commenting on Kingswood’s US expansion, Howard Garland, Partner at Pollen Street, said: “We believe the US wealth management sector offers compelling opportunities for growth. Mike and his team have a clear strategy and we are excited to partner with Kingswood to deliver these goals. Pollen Street has extensive expertise in the global financial services sector, growing market leading companies organically and through acquisition. We believe our unique experience and skillset coupled with our capital commitment will enable Kingswood to accelerate implementation of their US strategy.”
For further details, please contact:
Peel Hunt LLP (Nomad and Broker)
James Britton / Rishi Shah
+44 (0)20 7418 8900
Greentarget (for Kingswood media)
Jamie Brownlee / Alice Gasson / Ellie Basle
+44 (0)20 7324 5498
Stand Agency (for Pollen Street media)
+44 (0) 7973 596 503
Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) international fully integrated wealth management group, with around 16,000 active clients and circa £4.8 billion of Assets under Advice and Management. It has a growing network of offices in the UK including Abingdon, Beverley, Darlington, Derby, Grimsby, Hull, Lincoln, London, Maidstone, Newcastle, Sheffield (2), Worcester and York with offices in Johannesburg, South Africa and Atlanta, New York and San Diego in the US.
Kingswood offers a range of trusted investment solutions to its clients, which range from private individuals to some of the UK’s largest universities and institutions, including investment advice and management, personal and company pensions and wealth planning. Kingswood is focused on becoming a leading player in the wealth and investment management market through targeted acquisitions in the UK and US, creating a global business through strategic partnerships.
About Pollen Street Capital
Pollen Street Capital is an independent alternative asset investment management company focused on the financial and business services sectors across both private equity and credit strategies. The private equity strategy is focused on investing in lower middle market firms which have the capacity to become leaders in their field across Europe. Pollen Street have deployed over £1.2bn capital into this strategy over the last 14 years delivering strong returns throughout. It was established in 2013 and manages £2.8bn gross AUM on behalf of investors including leading pension funds, asset managers, banks and family offices from around the world. Pollen Street Capital has a team of 70+ professionals with offices in London and New York.