Close Brothers, the UK banking and wealth management firm, has agreed to sell its corporate finance advisory business as it moves to focus on its banking, asset management and securities divisions.

Daiwa Securities SMBC Europe, the European subsidiary of Japan's Daiwa Securities SMBC, has signed a deal to purchase Close Brothers Corporate Finance Holdings for a net cash consideration of £67 million ($102.5). Under the deal, Close Brothers will receive a gross consideration of £75 million but will contribute £8 million of working capital to Close Brothers Corporate Finance prior to completion.

The sale of Close Brothers Corporate Finance, which posted a profit after tax of £4.7 million for 2008 and had total assets of £58.4 million at the year-end, is expected to close by the end of August 2009.

On the basis of end-April 2009 net assets, the sale is expected to generate a non-taxable gain on disposal of approximately £8 million, after the settlement of long term financing. The net proceeds of the sale will be reinvested in Close Brothers’ other businesses, the firm said in a statement.

“Our focus is on developing our three larger divisions, banking, asset management and securities, which are well positioned and have strong prospects. The sale of the corporate finance business is a good opportunity for us to realise value for shareholders,” said Preben Prebensen, Close Brothers’ group chief executive.

Close Brothers said its adjusted operating profit for the six months to 31 January this year fell to £62.2 million from £75.3 million a year before. It recorded a pre-tax profit of £38.5 million, a fall of 45 per cent over the same period a year before.

Within its asset management arm, adjusted operating profits dropped by 63 per cent to £6.6 million, reflecting lower funds under management, a shift by clients towards lower fee products and fewer performance fees.