17th Apr 2014 08:18
LONDON (Alliance News) - Investment company EW Group Ltd Thursday said it would buy the remainder of its major investment, European Wealth Management Group Ltd, for about GBP7.1 million, saying it would help the unit get access to new funds to help it grow.
EW Group bought a 33.3% stake in European Wealth in April 2012, a deal that valued it at GBP2.17 million at that time. EW then increased its holding to 48.8% in March 2013 in a deal that valued European Wealth at about GBP3.9 million. It is now buying the remainder in a deal that values European Wealth at about GBP13.45 million.
"EWMG has grown significantly since we first invested in it in April 2012, with funds under management and influence increasing approximately six fold to approximately GBP0.7 billion," EW Group Executive Director Paul Everitt said in a statement.
"We believe that significant opportunities for growth, both organic and acquisitive, exist within the wealth management industry. However the current arrangement, with EWMG being 48.8% owned by EWG and with EWMG Shareholders holding a further 39% of EWG, does not provide an efficient structure through which to raise growth capital," he added.
European Wealth had grown its funds under management and influence to approximately GBP660 million by the end of 2013, EW Group said in a separate statement. Its revenue more than doubled to about GBP5.8 million in 2013, from approximately GBP2.5 million in 2012, and its adjusted earnings before interest, tax, depreciation and amortisaton was GBP0.2 million, compared with a loss of the same amount in 2012.
"The directors believe that there are significant opportunities available to European Wealth to continue to grow as the consolidation in the wider wealth management market continues and ever increasing regulatory changes force the smaller wealth management firms to seek complementary business with which to merge," EW Group said.
EW Group's own net assets had more than doubled to GBP8.0 million at the end of 2013, from GBP3.3 million at the end of 2012, thanks to the growth of European Wealth. EW Group's profit rose to about GBP1.56 million, from GBP1.17 million, as it booked an unrealised gain on its European Wealth investment of approximately GBP1.71 million, up from a GBP1.39 million gain in 2012.
It said it will issue 2.6 million EW Group shares for the additional European Wealth stake and issue GBP5.2 million of convertible loan stock.
European Wealth's client base currently ranges from individuals with up to GBP7 million of assets to invest, to institutions investing up to GBP68 million.
"EWMG has identified a number of potential acquisition targets and intends to pursue further growth opportunities through strategic acquisitions funded by a mixture of equity and debt, although no specific proposals have extended beyond preliminary discussions," EW Group said.
EW Group shares were up 0.8% at 1.21 pence Thursday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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