Wealth managers merge

Brooks Macdonald swoops on Cornelian in £39m deal

Cornelian joins larger group

Brooks Macdonald Group has acquired Edinburgh-based wealth and asset manager Cornelian Asset Managers Group in a deal worth up to £39 million.

The acquisition involves an initial payment of £31m, of which £22m will be paid in cash and £9m in Brooks Macdonald shares.

A further contingent cash consideration of up to £8m is payable depending upon Cornelian meeting certain pre-agreed performance targets relating to the retention and growth of client assets as well as the realisation of cost synergies.

Completion is expected to take place in the first quarter of 2020 subject to regulatory approval.

An equity placing will raise £30m to fund the cash element of the acquisition. 

Cornelian has £1.4 billion of funds under management on a discretionary basis which has grown by £750m since 2014, driven principally by its multi-asset fund ranges distributed through intermediaries.

It generated revenue of £10.3m and EBITDA of £3.4m in the year to 30 September 2019.

Brooks Macdonald, which has an office in Edinburgh’s west end, said the acquisition has a compelling strategic rationale.

Jeremy Richardson: similar culture

It strengthens the group’s intermediary distribution reach and adds multi-asset funds as well as building scale in the group’s direct client offering.

Material financial benefits are expected from the acquisition, including an increase in Brooks Macdonald’s pro forma funds under management by c.10% to £14.7bn.

Annual cost synergies of £3.75m are expected to be achieved by the end of the June 2021. 

Caroline Connellan, chief executive of Brooks Macdonald, commented: “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.

“We have been able to agree a transaction that brings additional multi-asset capability and distribution strength into the group.  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.”

Jeremy Richardson, chief executive of Cornelian, said: “It was important to us to find a company with a similar culture and investment philosophy, and critically one that we were confident would provide the highest levels of service to our clients and intermediary supporters.  We are very pleased to be joining Brooks Macdonald.”

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