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AIM wealth manager Kingswood buys Manhattan Harbor stake

Kingswood, the listed UK based wealth manager, has acquired an interest in Manhattan Harbor Capital Inc, providing Kingswood with a key, strategic foothold in the largest global wealth and investment management market and a valuable support to Kingswood’s US expansion plans.

Kingswood has immediately acquired a 7% interest in Manhattan Harbor with the ability in the coming months, subject to regulatory approval in the US and entirely at Kingswood’s discretion, to achieve a 20% holding. Kingswood said today it would only seek to increase its interest in Manhattan Harbor if the resultant transaction was below the thresholds of a reverse takeover as defined by the AIM Rules for Companies.

In addition, certain related parties of Kingswood have an existing 20% interest in Manhattan Harbor with the option to acquire a further 5%.

The acquisition creates an exciting new strategic partnership for Kingswood to scale and cross-sell its services internationally, the company said in a statement today.

The acquisition is being completed by Kingswood’s wholly owned US subsidiary, Kingswood US Holdings Inc., for an initial consideration of $525,000, comprising a cash payment of $332,500 and a share element of $192,500 which will be satisfied through the issue of 1,654,787 new ordinary shares of 5 pence each at a price of 8.125 pence, calculated as the average share price of the prevailing 20 business days prior to the date of closing.

About Manhattan Harbor

Manhattan Harbor is a holding company with operations in New York and Atlanta that will acquire, consolidate and manage independent Broker Dealers (IBDs) and Registered Investment Advisers (RIAs) across the US. Manhattan Harbor is led by Michael Nessim, who has a 24 year track record in the industry. Manhattan Harbor currently has 31 registered representatives and 35 employees in total.

Najib Canaan, Kingswood’s US CEO, said:

“Michael is an experienced operator with a strong track record and we have selected him and Manhattan Harbor as our US strategic partner as we embark on our ambitious US expansion strategy.”

Manhattan Harbor recently announced it has acquired a 90% interest in FINRA-registered broker dealer, Benchmark Investments Inc, which provides full service securities brokerage and investment banking services to a broad-based group of individuals and corporate clients. Michael Nessim has transferred his prior business and clients to Benchmark, and now operates as an independent, fully licensed IBD, and will be immediately earnings accretive given these in place revenues.

Strategic Rationale

Kingswood is acquiring this interest at an attractive discount relative to market reflecting the desire of both parties to develop a highly accretive global platform providing clients access to investment product and services in major US and UK markets. The partnership enables Kingswood to gain a key, strategic foothold in the largest global wealth and investment management market.

By investing in Manhattan Harbor, Kingswood differentiates itself from its peers and supports its global aspirations of asset linking and cross-selling services and the partnership provides a solid base to potential further integration and a valuable support to Kingswood’s US expansion plans.

Under Najib Canaan’s leadership, Kingswood US says it is now in a strong position to execute its robust US acquisition pipeline and Najib and his team will oversee acquired entities which will be managed by Manhattan Harbor.

The partnership also helps Manhattan Harbor achieve its goal of cementing a strategic allegiance with the Kingswood listed entity that brings a number of benefits including boosting AUM and accelerating adviser recruitment.

As the largest global wealth management market, estimated to be worth $46.9 trillion as at 2016, Kingswood sees the US as a major growth opportunity. The market is still growing significantly year on year, with 5.7% compound annual growth rate forecast for the period 2016 – 2020. By the end of 2025, it is estimated the North American market will be worth in excess of $71.2 trillion.

Gary Wilder, Group CEO at Kingswood, said:

“In the last 12 months we have been focussed on growing the Kingswood brand in the UK and on sourcing a best-in-class management team to deliver our US strategy. We are delighted to be able to announce our first venture in the US and believe the team and structure we have put together with Manhattan Harbor is a very strong proposition, complimenting our existing offering. We are excited to begin this new partnership and our objective remains to grow both organically and dynamically by acquisitions.”

Commenting on the partnership, Michael Nessim, Head of Manhattan Harbor, said:

“We’re very pleased to partner with a well-known and respected UK wealth manager that has exciting international growth plans. The partnership provides dual benefits to both Manhattan Harbor and Kingswood including accelerating adviser recruitment and boosting AUM but also providing a foothold in the largest global wealth management market that is growing rapidly. We’re looking forward to this exciting new chapter with Kingswood.”

Stuart Fieldhouse, Editor

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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