Walker Crips Group plc (“Walker Crips” or “the Company”), the integrated financial services group, is pleased to announce that it has purchased 100 per cent of the membership interests in BPAM (the “Acquisition”) from the members (the “Sellers”). The Acquisition has received approval from the Financial Conduct Authority.
Information on BPAM
BPAM is based in London and provides investment and wealth management services to a loyal and established base of private clients on a predominantly discretionary basis. As at 28 February 2015, BPAM's assets under management (“AUM”) were £229 million, of which £192 million was discretionary-managed. Accordingly, BPAM's revenue is almost entirely of a recurring nature. As a result of the Acquisition, Walker Crips is taking on a team of five advisers led by Managing Director, Geoff Wright, and the founder of the business, Pat Barker, who continues as Chairman of BPAM.
Background to and reasons for the Acquisition
The Company has undergone a period of significant transition since the sale of its fund management division in April 2012 with a singular focus on expanding its core offering of investment and wealth management services. BPAM fits well with Walker Crips’ strategy and, apart from the opportunities for cost synergies, the addition of capable investment managers and their discretionary fee-based revenue streams provides a key step in achieving the additional scale needed to reach the Company's medium-term target of £5 billion assets under management and administration (“AUMA”).
The consideration that the Company will pay for BPAM comprises a combination of cash, the value of BPAM’s net assets at completion of the Acquisition (“Completion”) and new ordinary shares in the Company (“Consideration Shares”) amounting in aggregate to a maximum of £4,193,900, which includes up to £265,000 in cash, an amount linked to the value of BPAM’s net assets on a pound-for-pound basis. As well as payment for net assets, the initial consideration comprises £1,728,900 in cash, together with the issue and allotment, credited as fully paid, of 440,771 Consideration Shares valued at the 5 day average closing price of the Company’s Ordinary Shares prior to Completion. The Sellers have each agreed to lock-in and orderly market arrangements in relation to the Consideration Shares. Application will be made for the Consideration Shares to be admitted to the premium segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s main market for listed securities.
Dependent on the revenues achieved by the BPAM business, there may also be a deferred consideration payable by the Company over the next 3 years of up to an aggregate amount of £2 million, payable 90% in cash and 10% in new ordinary shares in the Company, subject to the continuation of current levels of revenue over the earn-out period. The full earn-out will be payable only if average annual revenues equal or exceed £1.6 million over the 3 year period following Completion. The cash element of both the initial and deferred consideration will be satisfied from the Company’s existing cash resources.
Effects of the Acquisition
In the year to 31 March 2014, BPAM generated recurring revenue of £1.5 million and had net assets attributable to members of £275,619 and profits for the financial year attributable to members of £564,514 before members’ profit shares.
As at 28 February 2015, Walker Crips had £1.8 billion of AUM. Following the Acquisition, Walker Crips' AUM will increase by 12.6% to £2.0 billion and AUMA will increase to £3.5 billion.
The Company also envisages significant opportunities for cost synergies, particularly those arising from use of Walker Crips’ in-house platform and systems, reduced running costs from lower shared administration headcount and reduced premises overheads. Accordingly, the Acquisition is expected to be earnings-enhancing in the first full year of ownership.
The Company was advised by Asgard Partners Limited in relation to the Acquisition. Rodney FitzGerald, Chief Executive of Walker Crips Group plc, commented: “This is an important step in our continuing quest for growth, taking our AUMA to £3.5 billion from £1.4 billion just 3 years ago as well as increasing the capacity of our London stronghold alongside our ongoing regional expansion. BPAM's business is a complementary bolt-on to our existing offering which, with the combination of our similar investment styles and culture, will facilitate a seamless enhancement for BPAM's clients.”
Pat Barker, Senior Member of Barker Poland Asset Management LLP, commented: “This is an exciting development for our business and particularly for our clients as we become part of Walker Crips, where our services will expand their existing offering. Walker Crips' long-term heritage and financial stability will allow us to continue to do what we do best, namely managing clients' money on a discretionary basis and providing our usual high levels of advice and service to clients.”
Asgard Partners Limited (Financial adviser to Walker Crips)
Telephone: +44 (0) 20 7653 9011
Broadgate Mainland (Public Relations adviser to Walker Crips)
Telephone: +44 (0) 20 7726 6111
Cantor Fitzgerald Europe (Financial adviser to BPAM)
Telephone: +44 (0) 20 7894 7667
This Announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company’s current expectations and projections about future events. These statements, which sometimes use words such has “aim, “anticipate”, “believe”, “intend”, “plan”, “estimate”, “expect” and words of a similar meaning, reflect the directors’ beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. By their nature, forwardlooking statements involve risk and uncertainty because they relate to future events and circumstances. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Announcement is subject to change without notice and, except as required by applicable law, neither the Company, nor any member of its group, its Directors or its Financial Adviser assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained therein. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement. No statement in this Announcement is or is intended to be a profit forecast or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.
Roland Cross / Gareth David / Aramide Debo-Aina
Tel: +44 (0)20 3697 4200