LONDON: Close Brothers Group has agreed to sell its wealth management business, Close Brothers Asset Management (CBAM), to funds managed by Oaktree Capital Management, L.P. for an equity value of up to £200 million.
Mike Biggs, Close Brothers’ Chairman, commented: “Following a comprehensive strategic review, the Board is pleased to announce the agreed sale of CBAM to Oaktree. The transaction is expected to increase the group’s common equity tier 1 capital ratio by approximately 100 basis points, marking significant progress towards the plan we outlined in March 2024 to strengthen our capital base.
The Board has unanimously approved the transaction and believes that the agreed sale represents competitive value for our shareholders, allowing us to simplify the group and focus on our core lending business. CBAM has delivered impressive growth over the past years and has developed into a strong franchise.
Under the new ownership, it will benefit from additional resources to accelerate its growth trajectory. I would like to thank our CBAM colleagues for their dedication, professionalism and exceptional service to our clients.”
Federico Alvarez-Demalde, Oaktree Managing Director commented: “We are delighted that Close Brothers chose to partner with us on this important transaction. We have observed CBAM’s progress over several years and hold the franchise in high regard.
The business is well known for its client centric culture which we absolutely intend to preserve and nurture as we invest in its service capabilities and technology to build a vertically integrated UK wealth business of scale.
In the coming months we will bring to bear our extensive operational experience in the sector to work closely with Close Brothers and ensure a successful separation and transition of the business.”
Close Brothers Asset Management (CBAM) is a well-regarded UK wealth management franchise with a strong track record, healthy net inflows and significant growth potential. To realise the potential value of the business in the medium-term to the fullest extent possible, Close Brothers would need to continue to invest to accelerate CBAM’s growth strategy in the short and medium term, including via acquisitions against a consolidating market backdrop.
Selling its wealth management division at this stage allows Close Brothers to realise a competitive valuation for CBAM and strengthen Close Brothers’ capital position. The Transaction also allows the group to focus its resources on its core lending business, where it continues to see good growth prospects and encouraging customer demand.
The transaction will enable CBAM to accelerate its growth strategy under Oaktree’s ownership, which recognises CBAM’s value and its potential to become a leading UK wealth manager of scale. In order to achieve this, Oaktree intends to provide CBAM with the incremental investment required to increase its profitability and presence in the wealth management sector.