Brooks Macdonald has bought Edinburgh-based wealth manager Cornelian for up to £39m and has this afternoon sealed a £30m share placing to fund the deal.
In an update to the stock market this morning, Brooks Macdonald said it would pay an initial £31m for the company – £22m in cash and £9m in shares – with a further £8m cash available if Cornelian meets certain performance targets.
“Cornelian Asset Managers is an excellent cultural fit with Brooks Macdonald,” said Brooks chief executive Caroline Connellan.
The AIM-listed wealth manager reported full-year growth ahead of expectations in September, in a rare glimmer of hope for a sector that has struggled to stem the flow of client outflows. It completed the first round of a cost-cutting drive earlier this year.
Brooks’ purchase of Cornelian, which had £1.4bn funds under management at the end of September, is due to complete in the first quarter of 2020 subject to regulatory approval.
Brooks Macdonald’s share price fell 1.92 per cent following the news to 1,770p.
The company confirmed the placing had raised gross proceeds of approximately £30m at a share price of 1,775p per share.
Caroline Connellan, Chief Executive of Brooks Macdonald, commented: “We are pleased by the support and interest shown in the placing and we are committed to delivering sustainable value enhancing growth for all shareholders.”
Corneilain chief executive Jeremy Richardson said the firm was “very pleased to be joining Brooks Macdonald” and had been impressed by its “strong client focus and growth aspirations”.
“It was important to us to find a company with a similar culture and investment philosophy,” he continued, “and critically one that we were confident would provide the highest levels of service to our clients and intermediary supporters.”
“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,” said Connellan.
“The transaction creates value for our shareholders and crucially will provide benefits for both firms’ clients and the intermediaries with whom we work. The acquisition of Cornelian is a significant step forward in our medium-term strategy of delivering sustainable, value-enhancing growth.”