The latest example of M&A in the wealth and asset management industry saw the UK banking group sell its asset management business. Close Brothers also announced a rise in year-on-year pre-tax profits.

The wealth and asset management M&A carousel continues to spin; one of the more notable developments was UK-listed Close Brothers’ announcement last week that it was selling its asset management business to funds run by asset management house Oaktree Capital Management for an equity value of up to £200 million ($266 million). 

Close Brothers said the equity value of the deal, which included £28 million of contingent deferred consideration in the form of preference shares, represents a multiple of 27 times CBAM's statutory operating profit after tax for the 2024 financial year. 

An important reason for Close Brothers' deal, it said in a statement, would be having upfront cash proceeds of about £172 million to bolster its capital base and manage an uncertain business environment.

The transaction, which is expected to complete in early 2025 calendar year, is conditional upon receipt of certain customary regulatory approvals.

“The transaction is expected to increase the group's Common Equity Tier 1 capital ratio by approximately 100 basis points, marking significant progress towards the plan we outlined in March 2024 to strengthen our capital base,” Mike Biggs, Close Brothers' chairman, said in a statement. “The board has unanimously approved the transaction and believes that the agreed sale represents competitive value for our shareholders, allowing us to simplify the group and focus on our core lending business.”

Federico Alvarez-Demalde, Oaktree managing director said the firm intends to “build a vertically integrated UK wealth business of scale.”

As an example of other deals in the asset and wealth space, in September Canada’s Canaccord Genuity said its wealth management business in the UK & Crown Dependencies, aka CGWM UK, agreed to buy the international arm of London-listed Brooks Macdonald Group. In mid-August, a group of investors including CVC Group, Abu Dhabi’s sovereign wealth fund and Nordic Capital – a private equity house – agreed to buy UK investment platform Hargreaves Lansdown for £5.4 billion ($6.88 billion) in cash. In recent years, other combinations have included those of Rathbones and Investec Wealth & Investment (UK) and RBC's acquisition of Brewin Dolphin.

Financial results
In the 12 months to 31 July 2024, Close Brothers said its statutory pre-tax profit rose 27 per cent year-on-year to £142 million; adjusted earnings per share surged 38 per cent to 76.1 pence per share. Close Brothers Asset Management total assets rose 18 per cent to £20.4 billion. 

The group’s Common Equity Tier 1 ratio was 12.8 per cent at the end of July this year, compared with 13.3 per cent at the end of July 2023.