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Highlights:
- Close Brothers finalizes the sale of Close Brothers Asset Management (CBAM) to Oaktree Capital for an upfront cash consideration of £146 million.
- The transaction is expected to generate a £59 million gain, boosting Close Brothers' CET1 capital ratio by approximately 120 basis points.
- Further CET1 gains of up to 25 basis points anticipated over the next three years from reduced operational risk-weighted assets (RWAs).
Close Brothers Group plc (LSE:CBG) has announced the successful completion of the sale of its wealth management division, Close Brothers Asset Management (CBAM), to funds managed by Oaktree Capital Management. The transaction, which was first disclosed on 19 September 2024, closed on 28 February 2025, following receipt of all necessary regulatory approvals.
Financial Impact and Gain on Disposal
The sale is projected to deliver a pre-tax gain of approximately £59 million, which will be recognized in Close Brothers’ Full-Year 2025 financial statements. Notably, the group expects this gain to be non-taxable.
The gain calculation factors in:
- Upfront Cash Consideration: £146 million.
- Contingent Deferred Consideration: £28 million in preference shares, valued at around £21 million.
- CBAM’s Net Asset Value: Approximately £100 million, after a £26 million dividend paid to Close Brothers pre-sale.
- Transaction Costs: Around £8 million.
Any post-completion adjustments to the fair value of the contingent deferred consideration will be reflected in future income statements.
Capital Strength and CET1 Uplift
The transaction is expected to materially enhance Close Brothers’ capital position. The group anticipates an immediate 120 basis point boost to its common equity tier 1 (CET1) ratio, raising it from approximately 12.1% to 13.3% on a pro forma basis as of 31 January 2025.
This initial increase is primarily driven by:
- The gain on disposal.
- A reduction in credit risk RWAs associated with the CBAM business.
Moreover, Close Brothers expects an additional 25 basis points of CET1 benefit over the next three years as operational risk RWAs tied to CBAM gradually unwind.
Strategic Outlook
The sale of CBAM aligns with Close Brothers' strategy to streamline its operations and sharpen its focus on core lending and merchant banking activities. The strengthened capital position gives the group increased financial flexibility to pursue growth opportunities, support lending activities, and deliver long-term shareholder value.
