Major milestone: Kingswood confirms up to £80m growth capital

Kingswood confirms up to £80 million permanent growth capital in major milestone for the firm

• Growth capital is being provided by funds managed and/or advised by Pollen Street Capital
• Substantial investment is in the form of irredeemable Convertible Preference Shares, to be drawn in instalments to match acquisition funding needs
• Strong affirmation of Kingswood global vision and strategy and underpins share valuation growth not currently reflected in the market
Kingswood recently announced the acquisition of the assets of WFI Financial, a high-quality IFA business with approximately £550m under management and advice
• Kingswood is currently reviewing a number of potential US opportunities and has entered exclusive discussions to acquire a regulated business in Singapore serving the South-East Asia market

Kingswood, the listed UK based wealth manager, today confirms that it has raised up to £80 million by way of an issue of irredeemable Convertible Preference Shares to certain investors and funds managed and/or advised by Pollen Street Capital (‘Pollen Street’) in a hugely significant milestone for the firm. Following significant investment and rigorous restructuring over the last two years, Kingswood now has a strong foundation in place to grow and expand, and this substantial investment will help the Company to execute its significant acquisition pipeline, including the recent acquisition of the business and assets of WFI Financial (‘WFI’), a significant independent regional financial planning business based in Sheffield with offices in Derby, Grimsby and Lincoln.

Pollen Street is a global, independent alternative asset investment management company focused on the financial and business services sectors, with significant experience in specialty finance. It was established in 2013 and now has over £2.6 billion gross AUM across private equity and credit strategies.

Kingswood considered a number of fundraising options through institutional markets and investors, but the issue of irredeemable Convertible Preference Shares, convertible into Kingswood ordinary shares at 16.5p per share on or before December 31, 2023, provides the certainty and timeliness of funds that Kingswood believes could not be assured from other funding alternatives. Under the terms of the investment, which is subject to shareholder approval, Pollen Street has a right to appoint up to two directors to the Kingswood Board.

Gary Wilder, Group CEO at Kingswood, said: “We’re delighted to confirm the fundraising with Pollen Street. We believe they will be an excellent partner as we execute on our shared global vision for the Group. We have been extremely impressed by the depth of their industry knowledge, the thoroughness of their due diligence, and our shared belief in building a best in class global wealth management platform that delivers quality products to clients and outstanding shareholder value. We thank them for their efforts in getting to this significant milestone in Kingswood’s further development and the trust they have placed in the Board and its staff.

“This major investment by a global investor such as Pollen Street is a strong affirmation of the vision and growth strategy set by the Board at the beginning of the year.  The level of commitment highlights the growth potential both Kingswood and Pollen Street see in our stock and the potential to add significant value for shareholders.”

Howard Garland, Partner at Pollen Street Capital, commented: “We believe the wider wealth management sector offers compelling opportunities for growth. The business has a clear strategy for the future and we are excited to have the chance to partner with Kingswood. Pollen Street has extensive expertise in building market leading companies both via acquisitions and through organic growth using technological innovation and we are convinced these skillsets and our capital commitment will enable the Group to accelerate the implementation of their strategy.”

Kingswood’s vision is to become a leading global provider of trusted wealth planning and investment management solutions to clients, underpinned by investment in people and innovation with technology supporting our advisers and clients. Critical to delivery of our vision and underlying strategy are the continued development of our technology backbone, a rigorous risk management and compliance environment and the ongoing provision of attractive investment products to clients.

Kingswood management has already solidified a number of strategic initiatives designed to deliver on its vision and stimulate growth of the Group. Kingswood’s wealth planning business recently expanded with the acquisition of WFI, a high-quality IFA business with approximately £550m under management and advice; Marchant McKechnie in East Yorkshire which completed in Q4 2018; and the acquisition in Q1 2019 of Oxford-based Thomas & Co. These acquisitions have broadened Kingswood’s UK footprint, adding to its existing office network in London, Maidstone, Manchester and Worcester and upon completion of the WFI acquisition, Kingswood will have c. 5,500 active clients and AUM/AUA of c. £2.5 billion. In May 2019, the Company acquired an interest in US-based Manhattan Harbor Capital Inc., enabling Kingswood to gain a key, strategic foothold in the largest global wealth and investment management market.

So far this year, Kingswood has appointed Richard Jeffrey as Chairman of the Investment Committee and has built a robust investment process with a group of highly experienced professionals under its stewardship. Richard Klein also joined to lead and expand the firm’s alternative product offerings for distribution to its growing client base. Leigh Philpot recently joined in London as Head of Client Proposition to help the firm grow and enhance its business proposition for clients and intermediaries and generate new sales opportunities. Najib Canaan joined earlier this year in New York as US CEO to lead the Group’s growth efforts in that market, where he is already reviewing a number of potential opportunities. Kingswood has also entered exclusive discussions to acquire a regulated business in Singapore to focus on growth opportunities across Asia.

A new fee structure was implemented across the wealth planning platform from June 2019 and Kingswood’s Managed Portfolio Service (‘MPS’) has been enhanced and is now widely available across industry platforms. A new cash management product (in partnership with Flagstone) has also been launched and provides access to 550+ cash deposit options across 35 financial institutions.

Buzz West, Kingswood Chairman, concluded: “We’ve established an experienced team, an expanding product line and an international footprint which solidifies our growth plan. Our core proposition centres on primary offerings in wealth planning and investment management to deliver trusted financial solutions for clients. As we continue into the second half of the year, we look forward to further exciting announcements in terms of both domestic and international expansion and new investment products.”

Pollen Street’s growth capital investment was announced to the market via RNS on 12 September.