UK merchant banking group Close Brothers Group has officially announced the sale of its wealth management and financial planning division, Close Brothers Asset Management (CBAM), to US private equity firm Oaktree for up to £200m,
According to a market announcement, the deal consists of an upfront payment of £172m, consisting of £146m from Oaktree and a £26m dividend from CBAM to its parent company before completion. An additional £28m, in the form of preference shares, will be deferred and tied to performance factors like staff retention. The transaction, subject to regulatory approval, is expected to close early next year.
The deal is the latest acquisition of a UK wealth management business by a private equity investors following last month’s high profile £5.9bn takeover of Hargreaves Lansdown by a consortium consisting of CVC Capital Partners, Nordic Capital and Abu Dhabi Investment Authority.
Okatree already owns another UK wealth firm, Atomos.
The sale provides a significant cash boost for Close Brothers, which is currently under scrutiny by the Financial Conduct Authority (FCA) over historical issues in its motor finance business, with the group reportedly planning to use the £172m to strengthen its capital position, as it works towards building a £400m capital buffer.
Proskauer advised funds managed by Oaktree in this transaction.
