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European Wealth goes global: why Newbridge deal is just first step

European Wealth goes global: why Newbridge deal is just first step

European Wealth’s transformative acquisition of Newbridge Financial Services is the ‘first of a number of moves to become a really global distribution platform,’ says chief executive Marianne Ismail.

And she certainly has plans to back it up. ‘[Newbridge] is in itself a unique opportunity for us. It is present right across the US while a lot of other businesses are more local. This gives us exposure right across the country. We’re going to add to this exposure by acquiring teams to help us grow the business in the US.’

She says that to be truly global it was important to establish a US presence. In addition, Newbridge’s business, which has an investment banking arm, will give European Wealth the opportunity for IPOs.

A global presence

Aside from an expansion strategy in the largest financial services market in the world, Ismail is also turning her attention to bolstering the businesses in South Africa and Asia. She has also set her sights on establishing a presence in the Middle East.

‘The geographic reach of the new European Wealth will be Asia, South Africa, North and South America and we will look to be in the Middle East.

‘We are very conscious of the fact that we run a traditional asset management business with fixed income and equity. Looking at where we see a major opportunity is to differentiate ourselves by building an alternatives platform.’

This, she says, will give the company the ability to offer real estate, infrastructure, private equity, hedge funds and structured products. In order to achieve this the firm is looking to create partnerships with ‘best of breed’ asset managers globally.

In the Middle East, she pointed out that she will look to have offices where it makes sense, highlighting Dubai as an ‘obvious place to start to look’. While keen to expand operations in Singapore, extending its reach into other Asian countries is
also on the cards, such as Taiwan and Thailand.

Alongside bringing in more resources to support its retail business, Ismail also has ambitious plans to build out the firm’s institutional base. The company will extend into this market and will be looking to recruit an institutional sales team. ‘We’re making a big foray into the institutional world but also building on our existing client base,’ she commented.

Meanwhile in the UK, Ismail revealed that she is looking to hire more investment managers and financial planners.

What happened?

European Wealth announced the acquisition of US-based national broker dealer platform Newbridge, subject to regulatory approval, on 10 October.
The firm will fund the purchase through a convertible loan of $17.6 million (£13.3 million) with an interest rate of 7.5% per annum at a conversion rate of 16.5p per share.
The loan will be provided by Kingswood, which owns 39.99% of European Wealth and is expected to cover the initial consideration of $14.6 million and acquisition costs.

After the acquisition

Once the acquisition gets approval from Finra it will be time to integrate the businesses. The main change will be the rebranding of European Wealth as Kingswood.

Ismail said the management team at Newbridge, led by CEO Thomas Casolaro and chairman Leonard Sokolow, will remain with the business.

‘The two businesses can run in parallel but we will be looking to have operational synergies between them and the products we will be launching will be distributed by both businesses,’ she explained.

‘European Wealth will own Newbridge but the businesses are compatible so we’re not integrating everything. We will be taking all the efficiencies across the platform and deal with all the regulatory requirements in both businesses on a separate basis.’

Therefore, Newbridge will come under the European Wealth umbrella and sit alongside its existing three businesses: its investment management, financial planning and trading arms.

The combined business is expected to have $4 billion (£3 billion) AUM and 20,000 clients.

‘We are doubling our assets under management,’ says Ismail. ‘The market cap of European Wealth will also go up quite considerably.

What do we know about Newbridge?

Newbridge is a Florida-headquartered company which employs 220 advisers and associated broker-dealers nationwide. It has over 12,000 clients with $1.7 billion in assets under management across 46 offices. In the 12 months to 31 December 2016, it recorded a loss of $500,000 on a revenue of $28 million.

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