London-listed Kingswood Group (KPI) yesterday said it was in advanced talks with HSQ Investments to buy all of Kingswood’s shares and delist it as Kingswood seeks to manage debts that have risen amid an M&A drive.
HSQ, a wholly owned indirect subsidiary of funds run and/or advised by Pollen Street Capital, initially invested in KPI in September 2019, providing up to £80 million ($103.8 million) of growth equity capital to the business. HSQ, which holds 68.4 per cent of KPI’s voting rights, has confirmed that it will continue to support the business but thinks such a purchase is the wisest course.
KPI, which is quoted on the AIM market, has been buying businesses in a wealth sector consolidation drive. However, this strategy has pushed up its debt over the last two years, rising from a net cash position of £39.7 million to a net debt position of £48.1 million at 31 December 2023, it said in a statement. KPI said despite rising revenues, assets under management and administration since HSQ first invested in KPI in 2019, “performance has been impacted by the headwinds seen across the sector over the last couple of years. This has resulted in the company’s growth not being as strong over the period as management had expected.”
When other debt obligations are factored in, such as loans to handle working capital, KPI has amassed a gross debt of £90.7 million.
“Set against this, the company has imminent obligations which significantly exceed the cash balance available at the end of March 2025. In the absence of new external financial support, the company would not be able to satisfy these obligations,” it said.
“HSQ has confirmed that they continue to be supportive of the business but believe that this is most appropriate from a position as sole institutional shareholder alongside the company moving to an unlisted, private company setting and therefore they have stated that they would be willing to provide the required near-term funding only on this basis,” it said. “The Kingswood independent directors are strongly of the view that there is no other near-term credible alternative to the company other than the continued financial support from HSQ.”
At the start of this year, KPI appointed CEO Peter Coleman (pictured) as its permanent chief executive officer, following regulatory approval.
Peter Coleman
In March 2023, the group confirmed media speculation that it is working with investment banking company Houlihan Lokey to discuss strategic options for its UK business. KPI made 10 M&A deals in 2022 alone, for example. In February last year, KPI’s Irish subsidiary, Moloney Investments (MMPI), completed the acquisition of BasePlan, a Dublin-based retirement planning advice firm, following regulatory approval.