TORONTO, July 5, 2017 /PRNewswire/ --
Acquisition of Hargreave Hale
Limited combines two leading independent wealth management
businesses and will increase client assets and funds under
management and advice in the UK & Europe wealth management business to over £22
billion (C$38 billion)
Canaccord Genuity Group Inc. (the "Company", TSX: CF) is pleased
to announce that through its UK & Europe based wealth management business,
Canaccord Genuity Wealth Management ("CGWM (UK)"), it has agreed to
acquire Hargreave Hale Limited ("Hargreave Hale"), a leading
independent UK-based investment and wealth management business with
a total of £8.0 billion (C$13.5
billion) in assets under administration, management and
management contract.
The transaction establishes a substantially enlarged wealth
management operation in the UK and Europe with over £18.0 billion (C$30.4 billion) in private client assets and over
£4.7 billion (C$7.9 billion) in fund
management assets and represents another step in the Company's
strategy of growing its global wealth management business and
increasing its wealth management contribution to overall group
results.
"The acquisition of Hargreave Hale is an important step in our
strategy of building a leading independent global wealth management
business," said Dan Daviau,
President & CEO of Canaccord Genuity Group Inc. "We view this
transaction as a significant development in our long-term strategy
of transforming our business mix to grow contributions from our
global wealth management businesses, and one that will deliver
enhanced value for our clients and our shareholders."
Hargreave Hale is one of the UK's leading independent investment
and wealth management businesses, providing discretionary
investment management and stockbroking services to more than 14,000
private clients, intermediaries, corporations and charities. With a
history that dates back to 1897, the firm has maintained an
unwavering commitment to offering the highest standard of
investment management and advice centred on the principles of
accessibility, technical excellence and integrity. Hargreave Hale
operates a leading custody and settlement function and has a
nationwide presence in the UK with nine offices located in
Bangor, Blackpool, Carlisle, Lancaster, London, Norwich, Nottingham, Worcester and York.
Both Canaccord Genuity Wealth Management in the UK &
Europe and Hargreave Hale have
developed highly complementary, client-centric business models,
encompassing discretionary portfolio management, advisory and
execution-only stockbroking services, with CGWM (UK) also offering
wealth planning. There is a strong geographic fit between the two
businesses, with Hargreave Hale further strengthening CGWM (UK)'s
London presence and adding its
regional office network to expand CGWM (UK)'s footprint within the
UK.
The transaction also advances CGWM (UK)'s strategic ambition of
developing a leading first-class fund management business, by
combining its existing operation with the fund management business
of Hargreave Hale. Widely recognised as one of the UK leaders in
small- and mid-cap fund management, Hargreave Hale has an
exceptional track record of delivering top-quartile investment
performance. Giles Hargreave and the
wider fund management team will remain with the business and are
committed to growing this business within CGWM (UK).
The senior management of Hargreave Hale will continue to have
significant involvement and influence, holding key leadership roles
within the enlarged group and will be responsible for driving the
growth and development of the investment and wealth management
business.
"We are delighted to announce the acquisition of Hargreave Hale,
which wholly supports our ambitious growth plans for Canaccord
Genuity Wealth Management in the UK and Europe," said David
Esfandi, CEO of Canaccord Genuity Wealth Management in the
UK & Europe. "The strategic
rationale for this acquisition is underpinned by it being
complementary rather than duplicative. We are committed to
investing in and accelerating the growth of Hargreave Hale's fund
management and private client wealth management operations for the
benefit of the clients, staff and shareholders of both firms."
Mr. Esfandi continued: "I have been extremely impressed by the
quality and calibre of our new partners at Hargreave Hale, whose
breadth and depth of talent and expertise will be available to our
clients. Together, as one of the leading UK wealth management
businesses, we will be particularly well placed to respond to the
ever-challenging wealth management environment including an
increasingly demanding and more discerning client base."
Commenting on the transaction, Giles
Hargreave, Chairman of Hargreave Hale said: "With its
similar business model, shared culture and common values, Canaccord
Genuity Wealth Management in the UK represents the ideal partner to
continue the successful growth and development of our business.
Along with our senior management team, I look forward to working
with our new colleagues as we continue to deliver excellent
investment and wealth management services for our clients."
Under the terms of the transaction, CGWM (UK) will pay an
initial consideration to the shareholders of Hargreave Hale of
£52.0 million (C$87.9 million) and
additional contingent consideration of up to £27.5 million
(C$46.5 million). Additional
contingent consideration, if paid, will be funded from the ongoing
cash flow of the business. The contingent consideration is
structured to be payable over a period of up to three years,
subject to the achievement of certain performance targets related
to the retention and growth of client assets and revenues and an
amount determined with reference to the fund management
business.
It is expected that the acquisition will be immediately
accretive to the Company's adjusted
earnings[1]. The initial
consideration will be funded in part from a credit facility
provided to CGWM (UK) by National Westminster Bank plc and HSBC
Bank plc in the amount of £40.0 million (C$67.6 million).
For the twelve month period ended March
31, 2017, Hargreave Hale recorded total revenue of £48.0
million (C$81.1 million), net income
after taxes of £4.4 million (C$7.4
million) and EBITDA excluding deal-related and other
non-recurring costs of £8.0 million (C$13.5
million).
Acquisition-related costs comprised of deal costs, transaction
fees, and incentive-based payments subject to certain performance
criteria are expected to be approximately £16.0 million
(C$27.0 million) of which £8.0
million (C$13.5 million) will be
expensed at the time of closing, with the balance to be expensed as
a significant item over a four-year measurement period.
The acquisition will be effected by a Scheme of Arrangement
under the UK Companies Act 2006 and is subject to regulatory
approval and approval by shareholders of Hargreave Hale and other
customary closing conditions. CGWM (UK) has received irrevocable
undertakings from shareholders of Hargreave Hale, representing
approximately 81.0% of shares outstanding. The acquisition is
expected to be completed prior to the end of the third quarter of
fiscal 2018.
A conference call is scheduled to take place on Wednesday, July 5 at 6:00
a.m. Pacific time, 9:00 a.m. Eastern
time, 2:00 p.m. UK time,
9:00 p.m. China Standard Time, and
11:00 p.m. Australia EST. During the
call, senior executives will comment on the transaction and respond
to questions from analysts and institutional investors.
The conference call may be accessed live on a listen-only basis
and will also be archived at:
http://www.canaccordgenuitygroup.com/EN/NewsEvents/Pages/Events.aspx.
Analysts and institutional investors can call in via telephone
at:
- (647) 427-7450 (within Toronto)
- (888) 231-8191 (toll free outside Toronto)
- 0-800-051-7107 (toll free from the United Kingdom)
- 0-800-91-7449 (toll free form France)
- 10-800-714-1191 (toll free from Northern China)
- 10-800-140-1195 (toll free from Southern China)
- 1-800-287-011 (toll free from Australia)
- 800-017-8071 (toll free from United
Arab Emirates)
Please ask to participate in the Canaccord Genuity Group Inc.
management update call. If a passcode is requested, please use #
47383046.
A replay of the conference call will be made available from
approximately two hours after the live call on July 5, 2017 until August
8, 2017 at 416-849-0833 or 1-855-859-2056 by entering
passcode 47383046 followed by the (#) key.
________________________________________
(1) Adjusted earnings is a non-IFRS measure generally referred to
by the Company as net income excluding significant items.
Significant items include restructuring costs, amortization
of intangible assets acquired in connection with a business
combination, acquisition-related expense items and other
items related to business combinations and disposals as more
particularly described in the Company's Management Discussion
and Analysis for the year ended March 31, 2017 and available
on http://www.sedar.com. It is not expected that the
acquisition will be accretive to net income as determined in
accordance with IFRS for fiscal 2018.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
This press release may contain "forward-looking information" as
defined under applicable securities laws ("forward-looking
statements"). These statements relate to future events or future
performance and reflect management's expectations, beliefs, plans,
estimates, intentions and similar statements concerning anticipated
future events, results, circumstances, performance or expectations
that are not historical facts, including business and economic
conditions and Canaccord Genuity Group's growth, results of
operations, performance and business prospects and opportunities.
Such forward-looking statements reflect management's current
beliefs and are based on information currently available to
management. In some cases, forward-looking statements can be
identified by terminology such as "may", "will", "should",
"expect", "plan", "anticipate", "believe", "estimate", "predict",
"potential", "continue", "target", "intend", "could" or the
negative of these terms or other comparable terminology. By their
very nature, forward-looking statements involve inherent risks and
uncertainties, both general and specific, and a number of factors
could cause actual events or results to differ materially from the
results discussed in the forward-looking statements. In evaluating
these statements, readers should specifically consider various
factors that may cause actual results to differ materially from any
forward-looking statement. These factors include, but are not
limited to, market and general economic conditions, the nature of
the financial services industry and the risks and uncertainties
discussed from time to time in the Company's interim condensed and
annual consolidated financial statements, its annual report and its
annual information form ("AIF") filed on http://www.sedar.com as
well as the factors discussed in the sections entitled "Risk
Management" and "Risk Factors" in the AIF, which include market,
liquidity, credit, operational, legal and regulatory risks.
Material factors or assumptions that were used by the Company to
develop the forward-looking statements contained in this press
release include, but are not limited to, those set out in the
Fiscal 2018 Outlook section in the annual MD&A and those
discussed from time to time in the Company's interim condensed and
annual consolidated financial statements, its annual report and the
AIF filed on http://www.sedar.com. The preceding list is not
exhaustive of all possible risk factors that may influence actual
results. Readers are cautioned that the preceding list of material
factors or assumptions is not exhaustive.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, there can be no assurance that actual results will be
consistent with these forward-looking statements. The
forward-looking statements contained in this press release are made
as of the date of this press release and should not be relied upon
as representing the Company's views as of any date subsequent to
the date of this press release. Except as may be required by
applicable law, the Company does not undertake, and specifically
disclaims, any obligation to update or revise any forward-looking
statements, whether as a result of new information, further
developments or otherwise.
ABOUT CANACCORD GENUITY WEALTH MANAGEMENT
Canaccord Genuity Wealth Management provides comprehensive
wealth management solutions and brokerage services to individual
investors, private clients, charities and intermediaries through a
full suite of services tailored to the needs of clients in each of
its markets. Canaccord Genuity Wealth Management has Investment
Advisors (IAs) and professionals in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity Wealth Management
is a division of Canaccord Genuity Group and operates in the UK
& Europe as Canaccord Genuity
Wealth Limited and Canaccord Genuity Wealth International
Limited.
ABOUT CANACCORD GENUITY GROUP INC.:
Through its principal subsidiaries, Canaccord Genuity Group Inc.
(the "Company") is a leading independent, full-service financial
services firm, with operations in two principal segments of the
securities industry: wealth management and capital markets. Since
its establishment in 1950, the Company has been driven by an
unwavering commitment to building lasting client relationships. We
achieve this by generating value for our individual, institutional
and corporate clients through comprehensive investment solutions,
brokerage services and investment banking services. The Company has
offices in 10 countries worldwide, including Wealth Management
offices located in Canada, the UK,
Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity, the
international capital markets division, operates in Canada, the US, the UK, France, Ireland, Hong Kong,
China, Australia and
Dubai. To us there are no foreign
markets.™
Canaccord Genuity Group Inc. is publicly traded under the symbol
CF on the TSX.
http://www.canaccordgenuitygroup.com
For investor and media relations inquiries: Christina Marinoff, Vice President, Investor
Relations & Communications, Phone: +1-416-687-5507, email:
christina.marinoff@canaccord.com