The acquisition provides Kingswood with what the firm described as “a key, strategic foothold in the largest global wealth and investment management market and a valuable support to Kingswood’s US expansion plans”.
The firm has immediately acquired a 7% interest in Manhattan Harbor with the ability in the coming months, subject to regulatory approval in the US and at Kingswood’s discretion, to achieve a 20% holding.
Kingswood says it would only seek to increase its interest in Manhattan Harbor “if the resultant transaction was below the thresholds of a reverse takeover as defined by the AIM Rules for Companies”.
In addition, it was revealed that certain related parties of Kingswood have an existing 20% interest in Manhattan Harbor with the option to acquire a further 5%.
The firm said the acquisition “creates an exciting new strategic partnership for Kingswood to scale and cross-sell its services internationally”.
The deal is being completed by Kingswood’s wholly owned US subsidiary, Kingswood US Holdings Inc., for an initial consideration of $525,000 (£414,000), comprising a cash payment of $332,500 and a share element of $192,500 which will be satisfied through the issue of 1,654,787 new ordinary shares of 5p each at a price of 8.125 pence, calculated as the average share price of the prevailing 20 business days prior to the date of closing.
Manhattan Harbor is a holding company with operations in New York and Atlanta that will acquire, consolidate and manage independent Broker Dealers (IBDs) and Registered Investment Advisers (RIAs) across the US.
Manhattan Harbor is led by Michael Nessim, who has 24 years’ experience in the industry.
The firm currently has 31 registered representatives and 35 employees in total.
Gary Wilder, group CEO at Kingswood, said: “In the last 12 months we have been focussed on growing the Kingswood brand in the UK and on sourcing a best-in-class management team to deliver our US strategy.
“We are delighted to be able to announce our first venture in the US and believe the team and structure we have put together with Manhattan Harbor is a very strong proposition, complimenting our existing offering.
“We are excited to begin this new partnership and our objective remains to grow both organically and dynamically by acquisitions.”
Michael Nessim, head of Manhattan Harbor, said: “We’re very pleased to partner with a well-known and respected UK wealth manager that has exciting international growth plans.
“The partnership provides dual benefits to both Manhattan Harbor and Kingswood including accelerating adviser recruitment and boosting AUM but also providing a foothold in the largest global wealth management market that is growing rapidly.
“We’re looking forward to this exciting new chapter with Kingswood.”