The acquisition adds 48 people to the Financial Planning team, 22 of whom are Financial Planners. The deal increases funds under advice/management for the Kingswood Group to £4.8bn for over 16,000 clients.
Built by Jeff Graham over the past 20 years, Sterling Trust is headquartered in Hull, Yorkshire and has four satellite offices in Darlington, Newcastle, Sheffield, and York. It advises £1.2bn AUM on behalf of around 5,000 clients.
A spokesperson told Financial Planning Today that Mr Graham will remain with the company long term and "will take a broader role strategic role across our wealth planning business helping set the future direction for the business particularly across the North of England." Jeff will also join the board of the Financial Planning arm of Kingswood.
The acquisition takes Kingswood’s UK regional network to 14 offices.
A spokesperson told Financial Planning Today that Kingswood began looking at Sterling Trust before the Coronavirus lockdown.
He said: “Covid-19 clearly presented some challenges in completing due diligence and underwriting but the firm strongly believes in the robustness of its business model and the underlying strength of Sterling Trust.”
Kingswood has been on an acquisition spree. In May it announced the acquisition of US wealth manager Chalice and signed terms to acquire a majority stake in a second US adviser, Manhattan Harbor Capital.
Gary Wilder, group CEO at Kingswood, said: "This is a transformative transaction for the Kingswood Group, doubling our wealth advisory business and providing us with an opportunity to own a profitable regional financial planning business with built-in expertise and capacity to expand.
"There is also a major opportunity over time to migrate existing and new clients to Kingwood's extensive and growing range of managed investment solutions on our DFM platform, underpinning the value of a fully integrated wealth and investment management business. We have a robust pipeline of further acquisition opportunities in the UK and US that we are reviewing; and we have three transactions under exclusive due diligence in the UK.”
When asked about potential redundancies at Sterling Trust a spokesperson said: "Sterling Trust’s team will remain focused on their core strengths of client advice and business development. Advisers will continue to receive operational support and supervision from within their existing office network, and Kingswood will centrally manage regulatory and compliance, finance, HR and IT responsibilities."
Kingswood also announced its financial results today. Total revenue for the year was £10.1m, a 34% increase on prior year, reflecting the impact of the recent acquisitions. Operating EBITDA for the year to December 2019 was £0.7 million, an increase of £2.3 million over 2018.
Sterling Trust was acquired for £17.75m, payable over a 3-year period, and funded by Kingswood’s issue of over 7.7m new convertible preference shares under the terms of its agreement with HSQ Investment Limited, which is controlled by private equity firm Pollen Street Capital.
The new Convertible Preference Shares represent the sixth tranche of shares issued under the subscription agreement and the total number of irredeemable Convertible Preference Shares held by Pollen Street has increased to 18,350,043 shares at an issue price of £1 each.
Kingswood re-launched under new management in 2019, and appointed a new managing director, chief investment officer, head of investment management, and head of wealth in December.The Financial Planner added further senior new hires, including three in the UK, March this year.
Kingswood has offices around the UK including Derby, London and Sheffield and overseas in Johannesburg, South Africa, Atlanta, San Diego and New York, USA.