Kingswood H. Regulatory News (KWG)

23rd November 2021

Acquisition of Metnor Holdings Limited

Kingswood Holdings Limited ("Kingswood") announces it has agreed to acquire Metnor Holdings Limited ("Metnor") and its subsidiaries, IBOSS Asset Management Limited ("IBOSS") and Novus Financial Services Limited ("Novus") (Metnor, IBOSS and Novus together, "the IBOSS Group").

Bringing together the IBOSS Group and Kingswood Investment Management creates a leading UK discretionary fund manager (DFM) business with an enviable long-term investment track record, an award-winning service proposition, open market distribution, and a broad range of complementary investment solutions for our clients.

The transaction boosts Kingswood's UK assets under management ("AuM") to £3 billion with a growth aspiration to more than double this figure over the next three years. The transaction also supports Kingswood's broader ambition to be a top 10 UK investment management firm.

In addition to recently announced deals, the acquisition of the IBOSS Group increases Kingswood's client facing advisory team to 80 people, UK funds under advice/management to £6.3 billion, and the number of active clients to over 15,900.

Kingswood Group assets under administration ("AuA") will total over £7.9 billion from a combination of both global retail and institutional clients matching our ambition to grow globally as an international integrated full service wealth and investment manager 

This transaction also provides an attractive exit opportunity for the IBOSS Group's firms to be acquired by Kingswood without changing their client investment choices.

Kingswood Holdings Limited (AIM: KWG), the international, fully integrated wealth and investment management group, is pleased to announce it has agreed to acquire, subject to regulatory approval, Metnor Holdings Limited ("Metnor"). Metnor is based in Harrogate and is the holding company for IBOSS Asset Management Limited ("IBOSS") and Novus Financial Services Limited ("Novus") (Metnor, IBOSS and Novus together, "the IBOSS Group").

IBOSS is a leading provider of Managed Portfolio Services ("MPS") and other investment solutions on both an advisory and discretionary basis to UK independent financial advisers ("IFAs") under the leadership of Investment and Managing Director, Chris Metcalfe. IBOSS has developed a leading service proposition, as recognised by a five star rating in the FT Adviser service awards and an enviable, long term track record of high performance with low volatility. Novus is a reputable regional IFA meeting the needs of clients based largely in the North of England.

On an underlying basis for the 12 month period to 31 October 2021, the IBOSS Group generated revenue of £3.3 million and EBITDA of £1.3 million. The IBOSS Group currently employs 29 people and has over 6,000 clients with over £1.4 billion of AUA/M. At 31 December 2020, the IBOSS Group had net assets of £3.1 million.

David Lawrence, UK CEO at Kingswood, commented:

"My ambition when taking the reins of Kingswood's UK business was, and remains, to create a leading financial advisory and investment management business and this transaction is a big step towards that goal.

"In the IBOSS Group, Chris Metcalfe has built a fantastic brand with a superb Investment track record. From our first meeting, we knew that blending the IBOSS Group with Kingswood would create something special in the sector, harnessing the IBOSS Group's investment record, product range and open market IFA distribution with Kingswood's existing discretionary investment expertise and rapidly growing financial planning businesses.

"The IBOSS brand and expertise will be retained, with Chris Metcalfe and his investment team remaining at the helm of the investment strategy, implementation and servicing. With Kingswood's resources we aim to accelerate growth and create greater reach into the IFA sector. The transaction also allows Kingswood to leverage its successful track record in buying and integrating financial planning businesses by providing the capital to purchase financial planning businesses using IBOSS that wish to exit but don't wish to risk the investment solution provided to their clients.

"Kingswood's tailored Personal Portfolio Service (PPS) will strongly complement the Portfolio Management Services (PMS) and Managed Portfolio Services (MPS) products provided by IBOSS, with Kingswood also benefiting from IBOSS' OEIC products, as together we develop a full range of investment solutions for clients.

"We remain committed to our growth strategy within the UK and internationally. This is our fourth acquisition of 2021, and we have a strong pipeline of high-quality UK opportunities under negotiation, four of which are in the exclusive due diligence stage."

Chris Metcalfe Investment and Managing Director at Metnor commented:

''The synergy of Kingswood and IBOSS gives both parties an exceptional opportunity to enhance their client propositions and range of services. We had several potential suitors, but none realised the intrinsic value of how we manage money and the attraction for advisers that comes with our industry-leading service standards and client communications.

"As part of the Kingswood Group, we will offer our new and existing IBOSS users an exit strategy that will be one of the most attractive in the industry, something that adviser firms have been asking us to facilitate for some years now. We are pleased to be able to deliver precisely what advisers have asked for. For many adviser firms, continuing the investment proposition and not disturbing the client is extremely important.

"As we increase our range of investment services, we realised we would need to keep bolstering our team, especially in light of the Sustainable range, which is particularly research-heavy. Kingswood will offer us the ability to build up our investment team with no affect on to the strategy and methodology.''

Consideration and Funding

Upon receipt of regulatory approval, the consideration payable to the shareholders of Metnor is:

- Initial cash consideration of £9.6 million, paid on closing;

- A maximum of £6.4 million of deferred consideration, payable over a two year period, some of which is subject to the achievement of pre-agreed performance targets; and

- A performance based earn out linked to the three year EBITDA growth for IBOSS Asset Management Limited.

Each part of the Consideration may be paid in cash or, if a selling shareholder of Metnor so elects and Kingswood agrees, in ordinary shares of Kingswood. If the consideration is to be settled in cash, it will be funded from the issue of 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"). Kingswood's partnership with Pollen Street grows in strength, and to date has provided growth equity of £44.8 million to support existing and future acquisitions.

Grant Thornton and Eversheds Sutherland have supported Kingswood on both due diligence, accounting and legal work, with Simpson Wood Chartered Accountants and Pannone Corporate acting for Metnor.

For further details, please contact:

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

About Kingswood

Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) international fully integrated wealth management group with circa £7.8 billion of Assets under Advice and Management. It services circa 8600 clients from a growing network of offices in the UK including Abingdon, Beverley, Darlington, Derby, Grimsby, Harrogate, Hull, Lincoln, London, Maidstone, Newcastle, Sheffield (2), Worcester and York with overseas offices in Johannesburg, South Africa and Atlanta, New York and San Diego in 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

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 middle market firms which have the capacity to become leaders in their field across Europe. Pollen Street have deployed over £1.2 billion capital into this strategy over the last 14 years delivering strong returns for its investors that include 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.