London-listed wealth management group European Wealth Group Limited (LON:EWG) is to acquire Newbridge, a US-based, national broker-dealer platform.
The acquisition will almost double the assets under management (AUM) at the UK company to more than US$4bn and give it a strong footprint in the US.
European Wealth (EWG) said in a statement that it is acquiring the entire issued share capital of KPI US Holdco Inc, which in turn is acquiring Newbridge Securities Corporation and Newbridge Financial Services Group. To make matters a bit more convoluted, KPI US is controlled by KPI (Nominees) Limited, which has a 39.99% stake in EWG.
Under the heads of terms agreement, EWG proposes to fund the costs of the acquisition by entering into a US$17.6mln convertible loan with Kingswood bearing an interest rate of 7.5% a year, repayable within three years. The conversion price will either be 20p or the average mid-market closing price of EWG shares in a 20-trading-day period prior to conversion, whichever is the lower.
EWG will fund the initial consideration of US$14.6mln payable by KPI US relating to the acquisition of Newbridge using the proceeds of a convertible loan from Kingswood. It has also agreed to reimburse KPI US for its expenses incurred in relation to the Newbridge acquisition.
The cost of the acquisition may increase depending on the performance of Newbridge over a five-year period from the completion of the acquisition.
Should the acquisition go through, EWG plans to change its name to Kingswood Limited.
"We are ambitious to grow organically and energetically by acquisition. This is our first key step to deliver a profitable and differentiated strategy in the financial services arena,” said Marianne Ismail, chief executive officer of EWG.
"Newbridge presents a unique opportunity to invest in an established, well-positioned company that significantly increases our global footprint by gaining immediate access to the largest wealth management market in the world. We are confident that the proposed acquisition will allow us to accelerate our growth path towards our stated ambition of becoming a global vertically integrated financial services platform,” she added.