Wealth management firm Brooks Macdonald Group has acquired Arch cru investment manager Spearpoint in a deal worth up to £45m.
Spearpoint, a discretionary fund manager based in Jersey and Guernsey, took over management of the Arch cru cell companies from Arch Financial after the Arch cru fund range was suspended in March 2009.
As at 30 September, Spearpoint had £614m of discretionary funds under management, £95m of funds under management and £370m of advisory funds under management making a total of approximately £1.1bn of assets and funds under management.
The combined group will have discretionary funds under management of approximately £4.5bn, excluding advisory, property and third party administration assets.
Brooks Macdonald will pay an initial consideration of £23.1m to acquire Spearpoint as a mixture of of cash and equity. A deferred consideration will then be paid in cash in November 2014.
If the value of Spearpoint’s discretionary funds under management were to remain at approximately their current levels, Brooks Macdonald would expect the consideration to be around £4m.
Based on the Brooks Macdonald’s growth predictions for Spearpoint over the next year, Brooks Macdonald expects to pay an additional £5m of deferred consideration. The total consideration payable is capped at £45m.
Brooks Macdonald says the deal provides a way in to the offshore market for the company, builds scope within the group’s funds business, increases adviser distribution opportunities and allows the company to take advantage of the growing international pensions market.
Brooks Macdonald Group chief executive Chris Macdonald (pictured) says: “The acquisition of Spearpoint is a major step forward for the group and captures an opportunity we have been seeking for a number of years. It adds scale, offshore and international capability together with the acquisition of a strong investment management and pensions team.
“We are confident the combined group will be a leading presence in UK wealth management and that the acquisition will be immediately earnings enhancing.”
Spearpoint chief executive John Davey says: “We are delighted to be joining the Brooks Macdonald Group. There is a strong fit in terms of investment management style and culture.
“Everyone at Spearpoint is very excited about the opportunities that becoming part of Brooks Macdonald present.”
The group will provide offshore investment, management and administration through a new Brooks Macdonald International brand from the start of next year.
Brooks Macdonald says it intends to retain Spearpoint’s key management and staff, led by chief executive and co-founder John Davey. Lock-in arrangements for key staff have been put in place for a year.