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European Wealth builds acquisition pipeline in major overhaul

European Wealth builds acquisition pipeline in major overhaul

European Wealth has drawn up a hit list of potential acquisition targets in a major restructure of its business. 

As part of the restructure the firm, which has rebranded to KW Wealth, has sold its Swiss business and will be closing down its Gibraltar arm to focus more on its core UK market.

While the two international divisions made up a very small part of European Wealth’s overall business, the disposals are the latest move made by CEO Marianne Ismail (pictured) to restructure and streamline the company.

In its half year results for the six months to June 2018, the company announced that it sold its Swiss business for CHF 499,991 (£383,576) to an unnamed buyer, and is in the process of winding down EW Gibraltar.

It stated: ‘These decisions are in line with the board's strategy of focusing on our main market, the UK, while continuing to assess potential partnerships in the US (the largest global wealth management market), as well as building more client relationships in South Africa.’

Although its previous acquisition attempt in the US failed earlier this year, the company said that it has already developed a ‘pipeline of small to medium sized acquisitions’ in both the UK and US.

The business noted: ‘The opportunity for our group lies in partnerships with smaller successful firms with a strong cultural fit with our existing business. There are many opportunities being presented to the group on a weekly basis.’

Over the period, which saw the firm establish a new research-led central investment team and increase its headcount by 11, funds under management and administration reached £1.8 billion. The business also revealed that it is in the process of launching a new AIM portfolio alongside a number of ethical strategies, as part of an effort to expand its investment offering.

Losses widen

However, the company suffered a loss of £1.5 million, up from £0.8 million year-on-year, on a revenue of £4.8 million, which was also lower, by 8%, compared to the same period in 2017.

The reduction in revenue was attributed to a spike in financial planning revenue in 2017, which was not repeated this year.

There have been a number of changes at the company since Ismail took over as CEO a year ago.

She has reduced the number of regional offices to establish three hubs in London, Manchester and Kent, with the aim of reducing operating costs by £1.4 million.

Under her tenure, the company has also established a cash position of £4.5 million, as at 30 June.

Since it was established in 2011, the business had been funded by debt. It became debt free in June last year after a fundraising in which it issued around 48 million shares at 12.8p each, raising net proceeds of £8.8 million.

In August, Mauritius-based asset manager Astoria Investments, which had taken part in the initial fundraise, upped its stake in the company to 18%, netting European Wealth £1.3 million.

After taking the reins, Ismail also announced her intention to turn European Wealth into a global business. This was accompanied by the announcement of a deal to acquire US-based broker dealer platform Newbridge. However, it pulled out later with the aborted purchase costing the company around £490,000.

The deal was going to be funded through a convertible loan of $17.6 million (£13.3 million) provided by Kingswood, a substantial shareholder in European Wealth. While the deal has failed, the loan agreement remained, with £10.3 million of the facilities drawn.

Commenting on the interim results, Ismail said: ‘The group has now entered a new phase of development. We have rebranded the business as KW Wealth.

‘As we prepare for the future we have restructured and streamlined our investment management team, hired new investment managers and added to our in-house research team. We have also recruited several wealth planners in a very tight market.

‘Looking ahead, we are ambitious to grow both organically and dynamically by acquisition in both the UK and US.’ 

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