WEALTH manager Ashcourt Rowan is to buy UK Wealth Management (UKWM) for up to £14.25m in cash in a deal that will give it an entry into the lucrative Yorkshire market.
Ashcourt said the acquisition, which is subject to regulatory approval from the FCA, will create a leading UK wealth manager with a national footprint offering financial and investment advice to individuals and corporates.
Leeds-based UKWM, which traces its roots back over 25 years, operates out of five offices in Leeds, York, Pontefract, Macclesfield and Rugby.
It provides independent financial planning, wealth management and employee benefits to personal, corporate and trustee clients.
Ashcourt’s chief executive Jonathan Polin said: “We have a gap in our geographical footprint. We have nothing in Yorkshire and the north east of England. We’re a much more southern centric business.”
At the moment, Ashcourt’s offices are situated in wealthy southern cities and towns such as London, Bath, Winchester, Exeter, Cambridge and Bournemouth.
It has opened offices in Manchester and Scotland, but this will be its first foray into north eastern England.
Once combined, the two groups will have 17 offices across England and Scotland.
Aside from the geographical fit, Ashcourt is also keen to acquire UKWM’s corporate pensions business, which it sees as a fast-growing marketplace.
“It’s a proper, separate, well-funded corporate pensions business,” said Mr Polin.
“We really want to grow that side of the market.”
Ashcourt is to raise £15.3m to fund the acquisition.
The company said that UKWM’s business is complementary in terms of culture, outlook, client base and office footprint.
At the end of October, UKWM had £1.3bn assets under management, annualised revenues of £8.8m and earnings were at break even.
Ashcourt is hoping to make cost savings of at least £2.25m across the combined group and hopes to do this within six to nine months after completion with expected implementation costs of around £2m.
Mr Polin said that cost synergies will come from moving both businesses on to one operating platform.
“We will get rid of the duplication of lots of systems,” he said.
“We’ll have one IT system instead of two, one data centre instead of two. We see significant cost savings.”
Asked about job cuts, he said there was some duplication in top level management which will lead to job losses at director level, but the plan is to expand the total employee numbers.
Ashcourt has 257 members of staff and UKWM has 124, adding up to 381.
“It’s too early to say about job losses, but over time I see the 381 figure growing. We want to build up our business in Leeds,” said Mr Polin.
“In 2014, we will look for larger premises in Leeds.”
Ashcourt has a medium term target to grow to £10bn of assets over the next three to five years.
The UKWM deal will bring it to £5bn.
Mr Polin, who stayed up overnight to sign off the deal yesterday morning, said the enlarged group would look for further acquisitions to help it to achieve that goal.
“We’ll look for businesses that have a good fit with us.”
Ashcourt said the deal is expected to substantially enhance earnings per share in its first full year following completion.
The acquisition will be funded by a placing of 8.25 million shares at 185p, raising approximately £15.3m before expenses. The placing shares make up 23 per cent of the enlarged share capital.