28 May 2019
Kingswood Holdings Limited
("Kingswood", the "Company" or the "Group")
Kingswood goes global with first US strategic partnership
Ø Kingswood has taken an initial stake in Manhattan Harbor with a pathway to acquire an additional interest
Ø Partnership gives Kingswood a strong foothold in the largest global wealth market
Ø Best-in-class team now in place to drive US strategy
Kingswood, the listed UK based wealth manager, today announces that it has acquired an interest in Manhattan Harbor Capital Inc. ("Manhattan Harbor") (the "Acquisition") providing Kingswood with a key, strategic foothold in the largest global wealth and investment management market and a valuable support to Kingswood's US expansion plans. Kingswood has immediately acquired a 7% interest in Manhattan Harbor with the ability in the coming months, subject to regulatory approval in the US and entirely at Kingswood's discretion, to achieve a 20% holding. Kingswood 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, certain related parties of Kingswood have an existing 20% interest in Manhattan Harbor with the option to acquire a further 5%.
The Acquisition creates an exciting new strategic partnership for Kingswood to scale and cross-sell its services internationally.
The Acquisition is being completed by Kingswood's wholly owned US subsidiary, Kingswood US Holdings Inc., for an initial consideration of $525,000, 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 5 pence each at a price of 8.125 pence ("New Ordinary Shares"), calculated as the average share price of the prevailing 20 business days prior to the date of closing.
About Manhattan Harbor
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 a 24 year track record in the industry where he has consistently delivered strong, profitable revenue streams for investors. Manhattan Harbor currently has 31 registered representatives and 35 employees in total.
Najib Canaan, Kingswood's US CEO at Kingswood, said: "Michael is an experienced operator with a strong track record and we have selected him and Manhattan Harbor as our US strategic partner as we embark on our ambitious US expansion strategy."
Manhattan Harbor recently announced it has acquired a 90% interest in FINRA-registered broker dealer, Benchmark Investments, Inc. (Benchmark), which provides full service securities brokerage and investment banking services to a broad-based group of individuals and corporate clients. Michael Nessim has transferred his prior business and clients to Benchmark, and now operates as an independent, fully licensed IBD, and will be immediately earnings accretive given these in place revenues.
Kingswood is acquiring this interest at an attractive discount relative to market reflecting the desire of both parties to develop a highly accretive global platform providing clients access to investment product and services in major US and UK markets. The partnership enables Kingswood to gain a key, strategic foothold in the largest global wealth and investment management market. By investing in Manhattan Harbor, Kingswood differentiates itself from its peers and supports its global aspirations of asset linking and cross-selling services and the partnership provides a solid base to potential further integration and a valuable support to Kingswood's US expansion plans. Under Najib Canaan's leadership, Kingswood US is now in a strong position to execute its robust US acquisition pipeline and Najib and his team will oversee acquired entities which will be managed by Manhattan Harbor.
The partnership also helps Manhattan Harbor achieve its goal of cementing a strategic allegiance with the Kingswood listed entity that brings a number of benefits including boosting AUM and accelerating adviser recruitment.
As the largest global wealth management market, estimated to be worth $46.9 trillion as at 2016*, Kingswood sees the US as a major growth opportunity. The market is still growing significantly year on year, with 5.7% compound annual growth rate forecast for the period 2016 - 2020. By the end of 2025, it is estimated the North American market will be worth in excess of $71.2 trillion.
* PwC Report "Asset & Wealth Management Revolution: Embracing Exponential Change
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."
Commenting on the partnership, 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."
Admission and Total Voting Rights
Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM ("Admission"). The New Ordinary Shares will rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares following Admission. It is expected that Admission will become effective, and that dealings on AIM will commence, at 8.00 a.m. on 3 June 2019.
Following Admission the Company will have 162,348,684 Ordinary Shares in issue. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares with voting rights in the Company will be 162,348,684. The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules sourcebook.
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
Notes to Editors
For more information, please contact:
Kingswood Holdings Limited
+44 (0)20 7293 0730
Gary Wilder / Patrick Goulding
Kingswood US Holdings Inc.
+1 646 7346820
finnCap Ltd (Nomad and Broker)
+44 (0)20 7220 0500
Scott Mathieson / Anthony Adams (Corporate Finance)
Tim Redfern / Richard Chambers (ECM)
Greentarget (for media)
+44 (0)20 7324 5498
Jamie Brownlee / Alice Gasson / Ellie Basle
Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) integrated wealth management group, with more than 4,500 active clients and c. £2 billion of Assets under Management and Advice. It has a growing network of offices in the UK including London, Manchester, Cheltenham, Maidstone, Worcester, Beverley and Abingdon, and an office in Johannesburg, South Africa.
Kingswood offers a portfolio of services to its clients, which range from private individuals to some of the UK's largest universities and institutions, including investment advice and management, personal and company pensions, wealth planning, and stockbroking. Kingswood is focused on becoming a leading player in the wealth management market through targeted acquisitions in the UK, with the ultimate goal of creating a global business through strategic partnerships and its ambition is to gain a foothold in the US market in the near future.
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