Brooks Macdonald agrees £10m acquisition of Lloyds wealth business

The deal, which is expected to complete subject to regulatory approval in the fourth quarter of this year, will see Brooks Macdonald purchase 100% of the share capital of Lloyds Investment Fund Managers (LIFM) and its £1bn of discretionary assets.

In total, the deal is expected to cost just over £9.6m including £2.5m of regulatory capital, with initial consideration being up to £9.3m. 

A contingent cash consideration of around £330,000 will also be payable two years after completion depending upon LIFM meeting certain pre-agreed performance targets relating to the retention of portfolio clients. 

In a separate agreement, the businesses will have a "reciprocal arrangement", whereby the two parties will introduce relevant services to each other's clients.

LBFM brings Brooks Macdonald an additional £500m in funds under management and around 1,200 clients within its investment management business, and £500m in assets and around 10,500 clients via its funds business.

The deal increases Brooks Macdonald's international funds under management by up to two-thirds to £2.5bn, and brings multi-asset and fixed income fund capabilities.

It will also strengthen the group's international distribution efforts. It will increase the group's pro forma funds under management by up to 8% to over £13bn.

Based in Jersey, the acquired business will be rebranded as Brooks Macdonald International with "a number" of current Lloyds staff members offered roles to "expand and strengthen" the firm's international capability, ensuring continuity of customer service, the firm said.

Brooks Macdonald will outsource fund administration and leverage its existing investment management strengths to bring that activity in-house, which the firm expects to "drive a material uplift in profitability".

The acquisition is Brooks Macdonald's second in the past year, following the November purchase of Edinburgh-based wealth and asset manager Cornelian Asset Managers for a fee of up to £39m.

CEO of Brooks Macdonald Caroline Connellan explained that Andrew Shepherd's appointment as CEO of Brooks Macdonald International in April last year has seen "the reinvigoration of the business, delivering for clients, advisers and trustees". 

She added: "The acquisition of Lloyds' offshore wealth and funds business adds to this transformation, bringing greater scale, new capabilities and expanded distribution reach. 

"As well as the good strategic fit, our discussions with Lloyds Bank International have shown we have similar cultures with a shared strong focus on clients and intermediaries. 

"This acquisition… is a further step forward in achieving our growth ambitions, complementing our organic strategy, creating value for shareholders and bringing benefits for clients and intermediaries."

Shepherd added that the deal increases the firm's international FUM "materially", "brings a high quality discretionary portfolio client base and adds a strong multi-asset and fixed income fund range to our proposition to clients, advisers and trustees". 

He said: "It also brings additional intermediary relationships, increasing our distribution reach.  I am particularly pleased that the strong relationship we have built with the Lloyds Bank International management team means that we are putting in place a partnership agreement for cross-referral of clients with a shared commitment to explore other ways for the businesses to co-operate."

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