Eden Financial is an independent owner-managed private client investment management business with £835m in assets under management, run on behalf of 2,500 clients.
The acquisition is expected to take assets under management at Collins Stewart Wealth Management (Canaccord’s UK, Europe and offshore wealth management operations) to approximately £9bn.
The initial cash consideration for the purchase of Eden Financial is £7.68m upon completion, with a further £5.12m after 12 months depending on revenue retention and thresholds.
Canaccord Financial said further incentives of up to £4m had been set to reward further revenue growth and the meeting of revenue mix targets.
Under the deal Eden Financial will initially retain its brand, but it is expected that all of Canaccord’s UK, Europe and offshore wealth management operations will be rebranded Canaccord Wealth Management in 2013.
In a separate deal Eden has agreed upon the spin-off of its asset management business, but details of this are to be announced in due course.
The company said the acquisition of Eden Financial would provide greater scale to its wealth management business in London and bolster the service offering and investment opportunities available to Collins Stewart Wealth Management.
It added that it reflected the firm’s strategy of gradually growing the scale of its wealth management platform to take advantage of consolidation occurring in the UK wealth management industry.
Cuts in Canada
Meanwhile, the company announced “an acceleration” of its strategy to improve the performance of its Canadian wealth management division with the closure of 16 “underperforming branches”, as it refocused its operations in major centres across the country.
“This initiative will improve the operating results of this business and will ensure our capital investments in the business will be targeted to regions we see the most opportunity to grow our market share,” the company said in a statement.
It added that 16 Canaccord Wealth Management branches would continue to serve its clients across 14 cities in Canada, although the number of advisory teams has been reduced by 35 to approximately 180.
The company plans to continue offering a full suite of investment and wealth planning services to its clients, whom it runs $13.1bn of assets for.
Canaccord Financial said only 16% of this total was accounted for in the 16 branches scheduled to close, while the other 16 run 84%.
After the restructuring is complete the group expects the Canaccord Wealth Management business to operate on a “near break-even basis in current market conditions.”