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TriState Capital completes Killen Group acquisition


TriState Capital Holdings has closed its previously announced acquisition of investment management firm The Killen Group, Inc. (TKG), advisor to The Berwyn Funds.

TriState Capital is integrating TKG’s personnel and operations into the bank holding company’s Chartwell Investment Partners business, while maintaining The Berwyn Funds brand.

“We are pleased to welcome Killen’s exceptional investment professionals and other talented team members into Chartwell, creating an investment management firm with assets under management of more than USD10 billion, and excellent near- and long-term growth opportunities,” says TriState Capital Chief Executive Officer James F Getz. “Through this latest execution of our well-defined strategy to grow our boutique money management business, we immediately enhance the range of investment products Chartwell can offer, including the addition of a ‘fund for all seasons,’ the Berwyn Income Fund and its conservative allocation strategy.”

The Morningstar five-star rated Berwyn Income Fund had a net asset value of USD1.7 billion at 31 March, 2016. With its long-term record of strong performance, this fund was included in Morningstar’s 2015 “Fantastic 50” and 2014 “Fantastic 48” lists, which recognised an exclusive group of high-performing mutual funds that meet the independent investment research firm’s strict criteria.

“At Chartwell, we’ve combined compelling investment performance with very robust marketing, sales and service capabilities, attracting more than USD1 billion in new business and new flows over the last 12 months alone,” says Chartwell Managing Partner and Chief Executive Officer Timothy J Riddle. “With the addition of our newest colleagues from Killen, we intend to utilize our scalable infrastructure and distribution capabilities to drive continued organic growth across the expanded array of products we’re excited to be able to provide to institutions, financial intermediaries and their high-net-worth clients, nationally.”

TriState Capital continues to expect the deal to be immediately accretive by adding approximately USD0.03 to the holding company’s consolidated earnings per share for the second half of 2016, or USD0.06 to USD0.07 on an annualized basis. The total value of the all-cash transaction is currently estimated to be in the range of USD15 million to USD20 million. This includes the initial purchase price of USD15 million, or 5.0 times a base EBITDA (earnings before interest, taxes, depreciation and amortization) of USD3.0 million, and estimated contingent consideration that may be earned based on 7.0 times the incremental growth in TKG’s annual run-rate EBITDA over USD3.0 million at December 31, 2016.

Chartwell’s pro forma weighted average fee rate, reflecting the results of the acquired TKG business, would have been 0.40% as of March 31, 2016.

“ no quote For more than three decades, The Killen Group has been guided by our steadfast commitment to stewardship of client capital, investing with a disciplined value orientation, and executing investment decisions based on our professionals’ painstaking research and independent thinking,” explained TKG Chairman and Chief Executive Officer Robert E. Killen, who joins Chartwell today with the entire Killen investment team. “ no quote Our new partners at Chartwell and TriState Capital share this commitment, ensuring continuity for our existing clients, providing exceptional career opportunities for our people, and allowing us to introduce our proven products and strategies to a host of new prospective investors.”

With both TKG and Chartwell headquartered in Berwyn, Pa., the firms are expected to consolidate their offices in the Main Line suburb of Philadelphia before the end of 2016. With the acquisition completed, Chartwell now has more than 60 employees.

Keevican Weiss Bauerle & Hirsch LLC served as TriState Capital’s legal advisor on the transaction. Stephens Inc. provided a fairness opinion to TriState Capital. Fox Rothschild LLP served as TKG's legal advisor on the transaction.

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