Fund management firm Brooks Macdonald has snapped up Edinburgh-based Cornelian Asset Managers in a £39 million deal that will add some £1.4 billion of funds to its portfolio.
Stock market-listed Brooks Macdonald said Cornelian was a well-established wealth manager with “national distribution reach and a track record of profitable growth”. It has 39 employees, including 12 investment professionals.
The deal is expected to complete in the first quarter of 2020, subject to regulatory approval.
Jeremy Richardson, chief executive of Cornelian, said: “Throughout our discussions with Brooks Macdonald, we have been impressed by their strong client focus and growth aspirations.
“It has been client and intermediary support over many years that has enabled us to build a successful business. Therefore, it was important to us to find a company with a similar culture and investment philosophy, and critically one that we were confident would provide the highest levels of service to our clients and intermediary supporters.”
Brooks Macdonald’s chief executive, Caroline Connellan, said: “From the outset of our discussions with Cornelian, we have been struck by the complementary cultures, investment processes and business models of the two firms, with both having a strong focus on clients and intermediaries.
“We are delighted that we have been able to agree a transaction that brings additional multi-asset capability and distribution strength into the group.
“The transaction creates value for our shareholders and crucially will provide benefits for both firms’ clients and the intermediaries with whom we work.”
She added: “The acquisition of Cornelian is a significant step forward in our medium-term strategy of delivering sustainable, value-enhancing growth.”
Brooks said the total acquisition costs would be up to £39m, with an initial consideration of £31m, split £22m in cash and £9m in Brooks’ shares.
A further cash amount of up to £8m is payable depending upon Cornelian meeting certain pre-agreed performance targets relating to the retention and growth of client assets as well as the “realisation of cost synergies”, Brooks added.
The group also announced an equity placing to raise some £30m which will be used to fund the cash element of the deal.
The deal will see an increase in Brooks Macdonald’s funds under management to some £14.7bn.
Shore Capital analyst Paul McGinnis said: "The statement notes that Brooks expects material cost savings, claiming annual synergies of £3.75m, expected be fully realised by 30 June 2021. This looks like a very big number in the context of an implied Cornelian cost base of £6.9m, especially in a business where the largest cost is people."
He added: "We welcome the ambition shown by a Brooks management team which has spent much of the last two years dealing with legacy issues and it has only been 2019 when it has been able to be more forward-looking."