London-listed wealth management and brokering firmBrewin Dolphin said today it has signed a memorandum of understanding to shed its corporate advisory and broking division to a new partnership entity to be called N+1 Brewin. As a result, the firm will focus on investment management going forward.
The entity will be capitalised jointly by leading European financial advisory and asset management group, N+1, and senior management of the division, Brewin Dolphin said in a statement.
Under the terms of the arrangement, Brewin Dolphin will receive a total nominal goodwill consideration of £5 million (around $8 million), made up of a £1 million up-front cash payment and a 14 per cent preferred interest in the new entity with a nominal value of £4 million.
The group will also receive a 6 per cent per annum return on its preferred interest which will be paid in priority to ordinary distributions for the period to 2017.
“It is envisaged that the preferred interest will be held for the medium term, allowing the Group to benefit from any future uplift in the new entity's value when it ultimately converts into N+1 equity,” it said in a statement.
The corporate advisory and broking division reported an operating profit of £1.3 million from turnover of £10.9 million in the year ended 26 September 2010. At the year end, the division had gross assets of £33.4 million and nil net assets.
Completion of the transaction is subject to contract and receipt of regulatory approval for the new entity. The division will remain part of the Group until completion, which is anticipated to take place by the firm's year end in September 2011.