UK wealth manager Kingswood has acquired a 7% stake in US-based registered investment adviser (RIA) consolidator Manhattan Harbor Capital in a bid to support its expansion plan across the states.
The acquisition is being made via Kingswood’s wholly-owned US subsidiary, Kingswood US Holdings, for an initial consideration of $525,000 (£415,000, €469,000).
This comprises a cash payment of $332,500 and a share element of $192,500.
Kingwood has an agreement to increase its stake to 20%, subject to US regulatory approval, but said it would only seek to take up the option “if the resultant transaction was below the thresholds of a reverse takeover as defined by the AIM rules for companies”.
In addition, some unnamed “related parties” of Kingswood have an existing 20% interest in Manhattan Harbor with the option to acquire a further 5%.
The deal will give Kingswood the ability to “scale and cross-sell its services internationally”.
The firm can now carry out its growth plan through its US team, which will oversee acquired entities managed by Manhattan Harbor.
Gary Wilder, group chief executive at Kingswood, said: “In the last 12 months we have been focused on growing the Kingswood brand in the UK and on sourcing a best-in-class management team to deliver our US strategy.
“We believe the team and structure we have put together with Manhattan Harbor is a very strong proposition, complementing our existing offering.
“Our objective remains to grow both organically and dynamically by acquisitions.”
History of the acquired
Manhattan Harbor is a holding company with operations in New York and Atlanta that will acquire, consolidate and manage independent broker dealers (IBDs) and RIAs across the US.
It is led by Michael Nessim and currently has 31 registered representatives and 35 employees in total.
Recently, Manhattan Harbor acquired a 90% interest in Financial Industry Regulatory Authority (Finra) registered broker dealer, Benchmark Investments, which provides full-service securities brokerage and investment banking services to a individuals and corporate clients.
Nessim has transferred his prior business and clients to Benchmark, and now operates as an independent, fully licensed IBD.
Najib Canaan, US chief executive at Kingswood, said: “Michael is an experienced operator with a strong track record, and we have selected him and Manhattan Harbor as our US strategic partner as we embark on our ambitious US expansion strategy.”
Nessim said: “The partnership provides dual benefits to both Manhattan Harbor and Kingswood including accelerating adviser recruitment and boosting assets under management but also providing a foothold in the largest global wealth management market that is growing rapidly.”