Brooks Macdonald acquires DPZ for GBP5.7m
Brooks Macdonald Group’s wholly owned subsidiary, Brooks Macdonald Asset Management (International) Limited (BMI), has acquired DPZ Capital from DPZ Holdings Limited.
The acquisition of Jersey based DPZ is for an initial consideration of GBP5.7m, made up of GBP3m in cash and the issue of new ordinary shares in the group at a value of GBP2.7m.
The total consideration payable by the group will not exceed GBP13m, which includes c.GBP1m of net current assets.
DPZ is a well-established wealth management business based in Jersey which was founded in 2007. It manages a range of distinct investment strategies founded on its core competencies: asset allocation, manager selection, fixed interest and credit investing, and equity selection. Funds under management since DPZ’s inception have grown rapidly and, as at 31 March 2014, DPZ had c.GBP430m of funds, c.GBP360m of which is managed on a discretionary basis, c.GBP60m of which is managed on an advisory basis and c.GBP10m is managed on an execution only basis.
Should the full value of DPZ funds under management transfer to BMI, based on their value as at 31 March 2014, the consideration would be, in total, GBP10.8m (excluding net current assets).
The consideration will be satisfied by an immediate cash payment of GBP3m together with a payment of new ordinary shares in the group to the value of GBP2.7m. The number of shares issued will be based on an agreed price of 1706.4 pence per new ordinary share. A further payment in cash of GBP2.4m will be paid in October 2014. These three elements together, totalling GBP8.1m, represent 75 per cent of the total consideration.
Based on the value of DPZ’s funds under management at 31 March 2016, a cash payment will be made comprising the total consideration due at that date less the upfront consideration already paid.
All of the cash payments will be financed from the group’s internal resources and the exact number of shares issued by the group as part of the upfront consideration will be separately announced.
The group’s stated strategy has been to build on the successful integration and growth of its international division, BMI, which was acquired in 2012, with further expansion of the international team and its capabilities, thereby strengthening its offering and accelerating its growth rate. Since acquisition, BMI has grown its funds under management and has increased the size of its team by 15 staff. The acquisition of DPZ is consistent with furthering this growth strategy.
The acquisition will increase the group’s international presence significantly, with an increase in discretionary funds under management managed out of the Channel Islands of over 50 per cent. In addition, DPZ brings additional skills to the business, which are expected to prove valuable routes to growth. First, the group intends creating a new fixed income offering based on the existing DPZ team who have been very successful in the asset class. Secondly, the group will create a new platform team reflecting the success of DPZ’s International MPS solution enabling this offering to be expanded further.
Chris Macdonald, chief executive of Brooks Macdonald Group, says: “This is a very exciting acquisition for the group in line with our strategy to expand our international division based in Jersey. DPZ is a high quality asset management business that has strong investment management and cultural synergies with the group. As well as adding scale to our international business DPZ bring a highly talented investment management team and additional skills to expand our offering. We very much welcome DPZ into the group.”
Darren Zaman, chief executive of DPZ Capital Limited, says: “We are very excited to be joining Brooks Macdonald. We believe that by combining with BMI we will become part of the leading investment management business in the Channel Islands and look forward to contributing to a strong and fast-growing international investment business that will bring many benefits to our clients and staff.”
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