ACQUISITION OF STERLING TRUST
Kingswood announces the acquisition of Sterling Trust, a major regional IFA platform, adding further breadth and scale to its distribution network which now includes 14 locations across the UK.
This is a transformative transaction boosting Kingswood’s client facing advisory team to 62 people and increasing funds under advice/management to £4.8 billion from over 16,000 active clients in the UK and US.
Kingswood Holdings Limited (AIM: KWG), the international, fully integrated wealth and investment management group, is pleased to announce it has completed the acquisition of Sterling Trust Financial Consulting Limited (Sterling Trust), a high quality IFA business which operates from headquarters in Hull, Yorkshire and four satellite offices in Darlington, Newcastle, Sheffield & York.
Gary Wilder, Group CEO at Kingswood, commented:
“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.”
Sterling Trust Acquisition
Sterling Trust provides independent financial advice to individuals and corporates across the UK and currently employs 48 people including 22 IFAs advising/managing £1.2 billion AUA/AUM on behalf of circa 5,000 clients.
The business has been acquired for a cash consideration of £17.75 million, payable over a 3-year period. £7.25m was paid at closing and the balance will be paid on a deferred basis subject to Sterling Trust meeting pre-agreed asset migration, recurring revenue and EBITDA hurdles over a 3-year year period, with the final deferred payment due in June 2023. An additional deferred payment of maximum £1.775 million is payable over the 3-year period subject to achievement of an excess EBITDA target over that period.
Sterling Trust is an established company built by Jeff Grantham over the last 20 years and has grown across Yorkshire and the North East of England through organic growth and the diligent acquisition of strong, local financial planning businesses. In the twelve months to 31 December 2019 it delivered EBITDA of £2.5 million through strong and consistent revenue growth and a keen focus on driving high levels of recurring revenue. Sterling Trust had total assets of £6.1 million at 31 December 2019.
The company has a highly qualified and experienced team of financial advisers supported by a dedicated technical, compliance and administration team. Sterling Trust’s continued success is built around developing and maintaining long-term client relationships, making the company’s culture a perfect fit for Kingswood.
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 LIMITED, a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street Capital Limited (“Pollen Street”).
The new Convertible Preference Shares represent the sixth tranche of shares issued pursuant to the subscription agreement and as such the total number of irredeemable Convertible Preference Shares held by Pollen Street has increased to 18,350,043 shares at an issue price of £1 each.
Patrick Goulding, Group CFO and Platform CEO, said:
“I have got to know Jeff well over recent months. He is an exceptional individual with a tremendous track record and a strong work ethic. We are delighted that he will remain with the Group in an executive capacity post integration and assume an expanded strategic role within our wealth business. Sterling Trust’s excellent team will remain focused on their core strengths of client advice and business development. 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.”
An investor and analyst presentation outlining in detail Kingswood’s results, its international strategy and business can be accessed by clicking here. We highly recommend shareholders, investors and other interested parties find time to access and review.