Having received regulatory approval, integrated wealth management group Kingswood Holdings Limited has formally closed its acquisition of an 85 per cent interest in Chalice Capital Partners and Chalice Wealth Advisors (Chalice).As permitted within the original Sale and Purchase agreement, the remaining Chalice shareholder has exercised its put option over the remaining 15 per cent interest, so on closing Chalice is now wholly owned by Kingswood.
Chalice Capital Partners is an Independent Broker/Dealer and Chalice Wealth Advisors is a Registered Investment Advisor, both located in San Diego, California and provides full service securities brokerage, advisory and investment banking services to a broad-based group of individuals and corporate clients. Chalice currently has 96 authorised representatives managing assets of USD1.1 billion (circa GBP0.9 billion).
As announced previously, the maximum consideration for 100 per cent of Chalice is USUSD4.0 million (GBP3.2 million) and initial consideration of USUSD1.0 million (GBP0.8 million) was paid on exchange in December 2019. Following regulatory approval and closing, the second tranche of USD1.0 million (GBP0.8 million) has now been paid by Kingswood. The maximum remaining balance of USD2 million (GBP1.6 million) will be disbursed on a deferred basis in 2020 subject to Chalice meeting pre-agreed asset migration, revenue and EBITDA hurdles.
To finance the second tranche Kingswood has issued a total of 869,000 new convertible preference shares (the “New Convertible Preference Shares”), under the terms of its convertible preference share subscription agreement with HSQ INVESTMENT LIMITED, a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street Capital Limited (“Pollen Street”).
The New Convertible Preference Shares represent the fifth tranche of irredeemable convertible preference shares issued pursuant to the subscription agreement and as such the total number of irredeemable Convertible Preference Shares held by Pollen Street has increased to 10,580,043 shares at an issue price of GBP1 each.
Gary Wilder, Group CEO at Kingswood, says: “We are delighted to welcome Derek Bruton and Mike Nessim along with their teams to the Kingswood group. The Heads of Terms to acquire a majority interest in MHC at an attractive discount relative to market reflects the desire of both parties to develop a highly accretive global platform providing clients access to investment product and services in major US and UK markets.
“Kingswood’s enhanced investment in MHC will cement a key, strategic foothold in the largest global wealth and investment management market, differentiate us from our peers and support our aspirations of asset linking and cross-selling services. The investment will provide a significant base to potential further integration and a valuable support to Kingswood’s US expansion plans. This puts us in a strong position to execute our robust US acquisition pipeline and Mike and his team will oversee acquired entities and focus on delivering Kingswood’s full service brokerage and banking proposition to clients.
“The partnership also helps MHC achieve its goal of formalising a strategic allegiance with the Kingswood listed entity that brings a number of benefits including boosting AUM and accelerating adviser recruitment and a significant foothold in the largest wealth management market globally, providing the springboard and best in class infrastructure to exponentially grow the business.“