Lighthouse Group has bought Independent Financial Adviser and self-invested personal pension (Sipp) administrator based in Manchester and Milton Keynes, Carrwood Barker Holdings.
Lighthouse is simultaneously raising approximately £3m in new ordinary shares from institutional and other investors.
The terms of the sale will see Lighthouse acquire the entire issued share capital of Carrwood Barker for an initial consideration of approximately £3.3m, payable in new Lighthouse shares. Deferred consideration of up to £1.2m is being paid in two tranches in the event that turnover of Carrwood Barker is not less than £9.5m during 2006, and £5.5 million in the six months to 30 June 2007.
John Stevenson, the principal founder of Carrwood Barker, will join the Board of Lighthouse as an executive director.
A shareholders circular has been sent out including details of a Notice of an Extraordinary General Meeting of the Company to be held on 30 November 2005.
Carrwood Barker was founded 13 years ago and currently employs over 40 IFAs. The average annual turnover of Carrwood IFAs is in excess of £160,000. The firm has introducer arrangements with approximately 100 firms of chartered accountants and solicitors across the UK and most of Carrwood Barker’s advisers are physically based in many of these firms.
Carrwood Barker annual revenues are currently about £8m. Of this, approximately £2.8m is recurring, being derived from renewal income, recurring fees and income from funds under management.
As part of the transaction, Lighthouse will also acquire ownership of City Pensions, a Sipp and small self administered scheme (Ssas) business administering 1,000 Sipps and Ssass, with an aggregate funds value of approximately £260m.
Lighthouse says it has conditionally raised approximately £3.1m through a placing of new ordinary shares, of which £2.3m is from institutional and other investors, and the balance is from certain Carrwood Barker guarantors, all at a price of 13.5p per share. It says the funds raised will be used to finance the repayment of existing Carrwood Barker debt as well as the expenses of the transaction and any expected integration costs and increase the working capital of the Enlarged Group.
David Hickey, chairman at Lighthouse, says: “Carrwood Barker has an excellent market position, through its business relationships with a significant number of firms of chartered accountants throughout the UK. Like Lighthouse, it has a strong compliance culture, derived in part from using only seasoned advisers skilled in providing independent advice to corporate and personal clients. The provision of IFA advice alongside accountancy firms is an ambition that many have attempted in the IFA sector, but at which John Stevenson and his team have been particularly successful. Accordingly I am delighted to welcome John to the Lighthouse Board.
The recurring annual income from Carrwood Barker comprises over 85% of the initial share consideration payable and increases the predictability of the enlarged Group’s turnover. When added to the significant cost savings expected from the transaction, and in light of the strong recent interim results published by Lighthouse, this transaction reinforces the Board’s expectation of continued financial progress for Lighthouse.“IFAonline
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