Harwood Wealth Management Group Plc AcquiresNetwork Direct Limited
The Board of HWMG (the "Board"), a leading UK based financial planning and discretionary wealth management group, is pleased to announce the acquisition of Network Direct Limited ("NDL"), a national network of financial advisers based in Wolverhampton, West Midlands for a maximum total consideration of up to £4 million, of which £1 million is payable upon completion (the "Acquisition"). The Acquisition is subject to Financial Conduct Authority ("FCA") approval.
- Acquisition of NDL for a total consideration of £4m, of which £1m is payable at completion with the balance payable based on the performance of NDL over the next 5 years
- NDL has a network of 107 financial advisers with assets under influence ("AuI") of £1bn
- Acquisition extends HWMG's reach nationwide
- Aims to focus on revenue synergies from NDL advisers leveraging HWMG's existing investment solutions
- Following completion of the Acquisition HWMG's AuI will be c.£3bn
- NDL is the Company's most significant acquisition to date and demonstrates continued execution of HWMG's strategy
Peter Mann, Chairman of HWMG, said: "We are extremely pleased to be able to announce this key strategic acquisition. We anticipate that the Acquisition will enable us to further leverage our existing investment solutions to the benefit of NDL's advisers and clients, and also that it will enable us to expand our reach across the UK where there is a growing market for the delivery of quality investment management and advice. We welcome the NDL team and advisers to the group, and look forward to working with them to deliver fully integrated investment solutions to their clients."
NDL is a network of financial advisers based in Wolverhampton, West Midlands, with 107 advisers spread across England, Wales, Scotland and Northern Ireland. The acquisition brings an additional c.£1bn AuI. NDL is being sold by its principal shareholders, Willian Wynn, Jenifer Schwartz, Brian Raymond, Richard Simon and Leslie Dennis Lee, together with various other minority shareholders.
Following receipt of FCA approval, the Acquisition will increase the Company's total AuI to approximately £3 billion from the £1.65bn announced at the Company's recent interims.
For the year ended 31 May 2015 NDL reported gross revenue before pay aways of approximately £10.1 million (unaudited) and was broadly break even (£24k loss before tax) (unaudited). The net assets of NDL as at 31 May 2015 were approximately £64k (unaudited). NDL's advisers do not currently have access to a dedicated suite of investment products and, as such, the Board aims to grow the NDL business by extending HWMG's provision of investment and pension advice, management and administration to the clients of NDL. In so doing, the Board intends to provide NDL's advisers with a more efficient investment solution to their existing client base.
NDL's fee model
Adviser firms within NDL's network pay a fee to NDL depending on the number of advisers within their business and the Board believes that this creates a relatively resilient income stream for NDL going forward since the resource required to service the assets remains the same regardless of fluctuations in AuI/AuM.
The maximum consideration payable for the Acquisition will be £4 million, based on the performance of NDL over the next 5 years. It is estimated that a further £250k of capital will be injected into NDL by the Company at completion to ensure capital adequacy post-acquisition.
The consideration is to be satisfied through cash. Initial consideration of £1 million has been paid from the Company's existing cash resources. Further deferred consideration of up to £3 million will be payable in cash over the 5 year period following completion, depending on the quantity of the existing AuI which are converted into assets under management ("AuM") over the 5 year period post-completion.