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Canaccord strikes £80m deal to buy Hargreave Hale

Canaccord strikes £80m deal to buy Hargreave Hale

Canaccord Genuity Group has struck a deal to acquire Hargreave Hale in a deal worth up to £79.5 million. 

Hargreave Hale chairman and top UK small cap fund manager Giles Hargreave (pictured), will remain with the business, along with the wider fund management and investment team. 

'The senior management of Hargreave Hale will continue to have significant involvement and influence, holding key leadership roles within the enlarged group and will be responsible for driving the growth and development of the investment and wealth management business,' Canaccord said in a statement.

Canaccord Genuity Wealth Management (CGWM) CEO and former Wealth Manager cover star David Esfandi said he was very impressed by the quality and calibre of people within Hargreave Hale.

'The strategic rationale for this acquisition is underpinned by it being complementary rather than duplicative,' Esfandi (pictured below) said. 

'We are committed to investing in and accelerating the growth of Hargreave Hale’s fund management and private client wealth management operations for the benefit of the clients, staff and shareholders of both firms.' 

Canaccord will pay an initial £52 million and an additional consideration of £27.5 million dependent on certain performance targets being met over three years. The deal will be part funded by a £40 million loan from National Westminster Bank and HSBC. Fenchurch Advisory Partners advised Hargreave Hale on the sale.    

Hargreave Hale, which can trace its roots back to 1897, offers wealth and fund management services, alongside stockbroking services to around 14,000 private clients, intermediaries, corporations and charities. It has £8 billion of assets under management and the combined group will have £22 billion. 

The firm has invested in increasing its regional presence in recent years and now has nine offices located in Bangor, Blackpool, Carlisle, Lancaster, London, Norwich, Nottingham, Worcester and York.

Over the 12 months to the end of March, Hargreave Hale reported total revenue of £48 million and net income of £4.4 million. Ebitda, excluding deal-related and other non-recurring costs, stood at £8 million. 

'The acquisition of Hargreave Hale is an important step in our strategy of building a leading independent global wealth management business,' Canaccord president and CEO Dan Daviau said.  

'We view this transaction as a significant development in our long-term strategy of transforming our business mix to grow contributions from our global wealth management businesses, and one that will deliver enhanced value for our clients and our shareholders.'  

Hargreave, who owns 3.63% of the business, added: 'With its similar business model, shared culture and common values, Canaccord Genuity Wealth Management in the UK represents the ideal partner to continue the successful growth and development of our business.

'Along with our senior management team, I look forward to working with our new colleagues as we continue to deliver excellent investment and wealth management services for our clients.' 

The deal remains subject to approval from the regulator and Hargreave Hale shareholders. They include Investec, which owns a 31.9% stake alongside joint managing director and former Wealth Manager cover star Stuart Brookes (above left) who owns 3.3%.  

The acquisition marks Canaccord's first major foray into the wealth market since it bought Collins Stewart Hawkpoint and Eden Financial's wealth business at the start of this decade, in deals worth £253.3 million and £12.8 million respectively.

Earlier this year, the firm acquired 100 client portfolios from Duncan Lawrie Private Banking. 

Citywire AA-rated Hargreave, another former Wealth Manager cover star, is one of the UK's most respected small cap investors. He runs a range of funds for business, including his flagship Marlborough Special Situations fund, which has returned 204% over the 10 years to May versus a sector average of 115%.

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