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Brooks Macdonald Group plc (LSE:BRK) has announced the sale of its wholly-owned subsidiary, Brooks Macdonald Asset Management (International) Limited (BMI), to Canaccord Genuity Wealth (International) Holdings Limited (“Canaccord”). The sale, which includes BMI and its subsidiaries, comes as part of a broader strategic move to simplify the Group’s operations and enhance its UK-centric growth strategy. The total consideration for the deal could reach up to £50.85 million, subject to performance targets.
Financial Details of the Sale
Under the agreement, Canaccord will initially pay £28 million in cash upon completion, expected by March 2025, contingent on receiving regulatory approval. An additional contingent consideration of up to £22.85 million may be paid two years after the transaction, depending on BMI's revenue performance during this period. This structure incentivizes future growth while providing Brooks Macdonald with immediate funds for reinvestment.
The proceeds will support Brooks Macdonald's focus on its core UK investment management and financial planning business, enabling the company to pursue organic growth and potential acquisitions within its domestic market. The sale also allows the Group to capitalize on structural opportunities in the UK financial services industry.
Strategic Review Leads to International Exit
The decision to sell BMI follows a strategic review of Brooks Macdonald's international operations, launched in March 2024. The review evaluated various options for BMI, with the sale emerging as the most favorable outcome for the Group and its shareholders. The Board believes the disposal will streamline operations, enabling Brooks Macdonald to concentrate on its core activities in the UK while providing BMI with a strong new owner in Canaccord.
As of June 30, 2024, BMI had £2.3 billion in Funds under Management (FUM) and generated £19.9 million in revenue for the financial year. BMI also delivered £3.3 million in underlying profit before tax, underscoring its value as an asset.
Transition and Financial Impact
The agreement between Brooks Macdonald and Canaccord ensures that BMI will be transferred with an agreed level of regulatory capital, and any surplus capital will be paid at the time of completion. The Group will incur costs of £3-5 million related to the separation and transitional arrangements, which will be treated as exceptional items in both the current and upcoming financial year.
Brooks Macdonald CEO Andrew Shepherd highlighted that the transaction represents a positive outcome for the company and its shareholders. Canaccord, with its strong presence in the Crown Dependencies, will provide BMI with a credible and experienced owner, ensuring continuity for existing clients. Brooks Macdonald will work closely with Canaccord to ensure a smooth transition and continuity of service.
