The international arm of Brooks Macdonald Group has entered into an agreement to acquire the Channel Islands wealth management and funds business of Lloyds Bank International.
The acquisition consists of 100% of the share capital of Lloyds Investment Fund Managers and the investment management assets and client relationships of the DFM arm of Lloyds Bank International.
Brooks Macdonald (BM) has also reached an agreement in principle with Lloyds on a reciprocal arrangement, where the two parties will introduce relevant services to each other’s clients.
Lloyds Bank International’s wealth management and offshore funds business has funds under management (FuM) of £1bn ($1.25bn,€1.11bn), all managed on a discretionary basis.
Its investment management business has around £500m in FuM serving about 1,200 portfolio clients, and its funds business has around £500m in FuM, predominantly distributed through 50 IFAs and serves some 10,500 mainly personal clients.
The total consideration is expected to be up to £9.63m, including £2.5m of regulatory capital, with initial consideration being up to £9.3m.
The full sum will be paid in cash from Brooks Macdonald’s existing financial resources.
A contingent cash consideration of up to £330,000 will be payable two years after completion, depending upon the acquired business meeting certain pre-agreed performance targets relating to the retention of portfolio clients.
The deal is expected to be completed in the fourth quarter of 2020, subject to regulatory approval.
The acquisition increases Brooks Macdonald International’s FuM by up to two-thirds to £2.5bn, and private clients up to around 1,200.
It adds multi-asset and fixed income fund capability, as well as strengthens the group’s international intermediary distribution reach.
Overall, it will increase in the group’s FuM by up to 8% to over £13bn.
Following completion, the combined business will be based at BM International’s office in Jersey and the businesses being acquired will be rebranded as Brooks Macdonald International.
A number of current Lloyds Bank International staff members will be offered roles in the combined business.
Brooks Macdonald will outsource fund administration and leverage its existing investment management capabilities to bring that activity in-house.
Further step forward
Caroline Connellan, chief executive of Brooks Macdonald, said: “The acquisition of Lloyds’ offshore wealth and funds business adds to this transformation, bringing greater scale, new capabilities and expanded distribution reach.
“This acquisition, the second for Brooks Macdonald in this financial year, is a further step forward in achieving our growth ambitions, complementing our organic strategy, creating value for shareholders and bringing benefits for clients and intermediaries.”
Andrew Shepherd, chief executive of Brooks Macdonald International, added: “It increases International FuM materially, brings a high quality discretionary portfolio client base and adds a strong multi-asset and fixed income fund range to our proposition to clients, advisers and trustees.
“It also brings additional intermediary relationships, increasing our distribution reach.”