The deal will see Kingswood's team increase to 83 people and its funds under management to £6.5bn from 16,640 active clients.
AFS was set up in 1998 and provides financial advice to over 400 active clients. It employs three advisers, with five support staff covering clients primarily in South Yorkshire with approximately £140mn assets under management.
Kingswood has bought the firm for £2.5mn, with £1.25mn paid once the deal is approved and the rest to be paid on meeting performance targets in the two years after completion.
David Lawrence, UK chief executive officer at Kingswood, said: "I am delighted to be welcoming the AFS team to Kingswood. Allotts has a great reputation for serving clients over many years and is a great addition to Kingswood’s existing footprint in the wider Sheffield region.
“After this acquisition is concluded we will have 13 advisers meeting their client's financial advice and investment needs.”
In the year ended March 31, 2021, AFS reported revenues of £791,000 and a profit before tax of £355,000.
Last week, Kingswood purchased DJ Cooke Financial Planning for £1.5mn in its first deal of the year.
Both deals will be paid from funds recently received by Kingswood from the issue of £3mn in convertible preference shares.
This was the eleventh tranche of such shares issued as part of an £80m commitment made to Kingswood by investment management firm Pollen Street back in September 2019.
Kingswood's partnership with Pollen Street has to date provided growth equity of £77.4mn to support existing and future acquisitions.
Lawrence added: “We remain committed to perpetuating our stated growth strategy within the UK and internationally.
“This is our second acquisition of 2022 and we continue to have a strong pipeline of high-quality UK opportunities under negotiation, five of which are in exclusive due diligence as we continue to grow our financial planning and investment management reach across the UK.”
Trading update
In a separate update today (February 1), Kingswood said it had cash funds of £41.3mn on its balance sheet as at December 31, 2021, an increase of £37.5mn from the previous year.
The group said this was largely due to further investment from Pollen Street Capital of £27.9mn, minus acquisition related payments, and £11mn cashflow generated from operating activities, mainly in the US.
The company expects to report full year revenues of about £148.8mn, up from £25.5mn last year, and an operating profit of £6.9mn, up from £0.9mn in 2020.
In 2021, Kingswood announced the purchase of Admiral Wealth Management, Smythe and Walter, Money Matters (North-East) and Metnor Holdings.
The firm said it expects to complete a further two acquisitions in the first quarter of this year.
Gary Wilder, group chief executive officer of Kingswood, said: "2021 was a transitional year for Kingswood, delivering record levels of revenue and profit for the group. We have a strong, well-capitalised balance sheet and with the support of Pollen Street Capital have continued our successful buy, build, grow and integrate strategy in the UK led by our UK CEO David Lawrence and our organic recruitment and partnership growth strategy in the US led by our US CEO Mike Nessim.
“Kingswood remains focused on building its long-term value strategy, centred around vertical complementary growth business lines in the international independent retail wealth and investment management sectors and has both the balance sheet strength and outstanding people to deliver this."
sonia.rach@ft.com
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