Investments  

Brooks Macdonald buys Edinburgh DFM

Brooks Macdonald buys Edinburgh DFM
 Caroline Connellan, chief executive at Brooks Macdonald

Brooks Macdonald is set to acquire Cornelian Asset Managers as the wave of consolidation in the discretionary fund management industry continues.

In a stock exchange announcement this morning (November 22), the asset manager and DFM reported it had entered a binding agreement to acquire 100 per cent of the shares in Cornelian for up to £39m.

Brooks Macdonald will initially pay £31m for the DFM, of which £22m will be in cash and £9m in Brooks Macdonald shares. The further £8m will be contingent on pre-agreed performance targets.

The deal will be part-funded by the issuing of new shares, expected to raise about £30m.

The acquisition will bring £1.4bn of funds under management — managed on a discretionary basis — to Brooks Macdonald, increasing its FUM by around 10 per cent to £14.7bn.

According to the stock exchange announcement, the deal is in line with Brooks Macdonald’s “strategy to explore selective and high quality inorganic opportunities” and will strengthen the group’s adviser reach.

The growth of Cornelian’s multi-asset funds, distributed solely through advisers, helped it grow its total FUM by £750m since 2014. Cornelian reported revenue of £10m in the year to end of September.

Brooks Macdonald also expects annual cost reductions in the combined business of £3.75m by June 2021.

Caroline Connellan, chief executive at Brooks Macdonald, said: "From the outset of our discussions with Cornelian, we have been struck by the complementary cultures, investment processes and business models of the two firms, with both having a strong focus on clients and intermediaries.  

“We are delighted that we have been able to agree a transaction that brings additional multi-asset capability and distribution strength into the group.”

Ms Connellan said the acquisition was a “significant step forward” in the firm’s medium-term strategy to deliver “sustainable, value-enhancing growth”.

Cornelian’s chief executive, Jeremy Richardson, said he was impressed by Brooks Macdonald’s “strong client focus and growth aspirations”, adding client and intermediary support had helped Cornelian’s success.

He said: “It was important to us to find a company with a similar culture. We are very pleased to be joining Brooks Macdonald.”

imogen.tew@ft.com