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Private equity firm to buy adviser for £91m

Private equity firm to buy adviser for £91m

A private equity firm is set to buy advice business Harwood Wealth Management in a deal worth £90.7m. 

In a statement this morning (December 23), the wealth manager announced Hurst Point Topco Limited, backed by private equity parent Carlyle, had agreed terms to buy Harwood.

The deal values Harwood at 16.3 times its unaudited adjusted earnings and the wealth manager's directors have already committed to back the sale, with their shares representing 66.8 per cent of the company. 

In today's announcement the directors said they intended to unanimously recommend the remaining Harwood shareholders vote in favour of the deal.

Harwood said the acquisition presented an "attractive" opportunity for shareholders to sell their shares in light of the "challenging market environment for organic growth, upward pressure on costs and the need for further funding to support ongoing acquisitions, as well as investment in the cost base".

Peter Mann, Harwood's non-executive chairman, said: "The Harwood management team has demonstrated a strong execution track record, undertaking multiple acquisitions, growing profits and achieving a significant increase in the share price since our [initial public offering] in March 2016 at 81p.

"Looking ahead, the board believes that Carlyle and Hurst Point will be excellent partners to Harwood, providing the capital backing, strategic support and additional resources and investment needed for the business to continue to grow."

Mr Mann said he believed the acquisition was in the best interests of all stakeholders at the company, which he said remained "committed to maintaining the very highest quality of service to our clients and our partners". 

He added: "The Harwood board therefore unanimously recommends that shareholders vote in favour of the resolutions relating to the acquisition."

If the sale proceeds Harwood said it would not pay a dividend to shareholders for the financial year ended October 31, 2019. 

In June Harwood reported a 74 per cent jump in pre-tax profits for the first half of the financial year, following a £4.3m acquisition spree and despite "turbulent" equity markets. 

Ian Gladman, executive chairman of Bidco, said he "greatly admired" the achievements of Harwood since it launched to market 18 years ago. 

Mr Gladman added: "Carlyle and Hurst Point believe the next phase of Harwood's development would be best conducted in the private domain and intend to provide the capital backing, investment, strategic support and global expertise to facilitate future growth."

Harwood was created by the merger of Compass Wealth Management and Wellian Investment Solutions. The company, which has around £5bn of assets under management, is listed on the Alternative Investment Market.

An increased demand from private equity buyers has been predicted in the advice acquisitions market, with introducer Soprano Mergers and Acquisitions confirming earlier this year it had already seen a significant interest from these type of companies

rachel.mortimer@ft.com 

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