AIM-listed WH Ireland has conditionally agreed to sell the business and certain assets of its Capital Markets Division to Zeus Capital for a total consideration of up to £5m.
The deal is expected to complete by mid-July 2024 “at the latest”, it said in a trading update on 3 June.
The “continuing” Wealth Management Division was “well positioned to take advantage of a recovery in markets”.
The Board of WH Ireland has been focused on returning the business to sustainable profitability, with an emphasis on restoring growth in revenue in both the Capital Markets Division and its Wealth Management Division, alongside continued cost discipline.
The directors had also committed to assess all strategic opportunities for WH Ireland, as they arose.
“The Directors believe that the sale of the Capital Markets Division will help to satisfy these objectives by immediately reducing the liabilities, as well as the working and regulatory capital requirements of the Group, while also increasing potential cash inflows if and when the deferred consideration is paid, shortly following the first anniversary of completion of the Transaction.
The Directors are encouraged by the opportunities that the Transaction will provide to the existing employees and clients of the Capital Markets Division.
Following completion of the Transaction, the combined business of Zeus Capital Limited and the WH Ireland Capital Markets Division (which will be known as Zeus Capital Limited), is anticipated to have over 125 retained corporate clients, a significantly enlarged trading platform, making markets in up to 200 stocks with broad institutional reach and approximately 90 employees.
This is expected to make it the second largest Nominated Adviser and Broker for AIM companies with offices in London, Manchester, Leeds, Bristol and Edinburgh.
Assets under management in the Wealth Management Division at the 31 March 2024 was £1.2bn (30 September 2023: £1.2bn; 31 March 2023: £1.4bn).
Cash at the end of April 2024 was £5.8m. (30 September 2023: £6.9m; 31 March 2023: £4.2m).
In the sale of its Capital Markets Division, the key assets being acquired include the corporate client contracts of the Capital Markets Division, the employees, the key supplier contracts, the Leeds and Bristol leasehold premises, and the transfer of High Net Worth clients together with their Execution Only Custody Accounts valued at approximately £600m”
The statement further said: “Clients of WH Ireland Capital Markets can be reassured that there should be no change to the client service teams or the existing terms and conditions (including fees) following the transfer to Zeus. Corporate clients who have appointed WH Ireland as its Nominated Adviser should also note that as WH Ireland’s Capital Markets Division is being integrated into Zeus, the transfer process for those clients appointing Zeus is expected to be simple and straightforward for all clients. A representative from WH Ireland will be in contact to explain the transfer process shortly.
“There will be no change to the ongoing operations of the Wealth Management Division, which the Directors believe will be well positioned to take advantage of improving market conditions, as a result of the Group’s cost reduction programme and the sale of the Capital Markets Division announced today.”
As at 30 September 2023, the Capital Markets Division had gross assets of £4.96m (unaudited); and for the year ended 31 March 2023 the Capital Markets Division generated revenues of £12.25m and a loss before tax of £2.48m (audited).
It is intended that the proceeds from the forthcoming sale of the Capital Markets Division will be applied to general working capital for the Group.
Phillip Wale, chief executive of WH Ireland said:“We are delighted to have agreed this transaction, which secures a good outcome for the Group and the Capital Markets Division, and is in line with our strategy to review strategic opportunities as they arise.
“We believe the combined business of Zeus Capital Limited and the WHI Capital Markets Division will represent a significantly enhanced platform for clients and employees, enabling them to manage the current market challenges and take advantage of a recovery in corporate activity from a position of strength as a leading independent investment bank in the UK.”
