LONDON: Liontrust, the independent British asset manager, has agreed to acquire the fund management and model portfolio services business of Hawksmoor Investment Management for up to £10 million ($13.4 million) in cash, the company announced.

The deal would add about £1.9 billion in assets under management and advice, and bring an experienced investment team into Liontrust’s Multi-Asset division.

John Ions, Chief Executive Officer of Liontrust, said: “Ben Conway and his team have a highly respected business, having built strong relationships with financial advisers and a loyal client base.

The proposed acquisition enhances Liontrust’s position among financial advisers, including through an expanded product offering, as an increasing proportion seek to partner with specialist asset managers for the outsourcing of investment management.

Combining Hawksmoor with Liontrust’s existing Multi-Asset proposition and strong client service, sales and marketing gives us great confidence we will be able to grow key client partnerships going forward.”

John Husselbee, Head of Multi-Asset at Liontrust, said: “Hawksmoor is a really strong addition to the Multi-Asset capability that we have developed over the past few years. Through their complementary funds and portfolios, managed by the teams headed by Ben Conway and Richard Philbin, they enable Liontrust to offer an even wider range of investment solutions to cater for the demand across the adviser market, including the expansion of our coverage of investment trusts and alternatives.”

Paul Feeney, Chief Executive Officer of Shackleton, said: “Hawksmoor’s Funds Management and Investment Solutions businesses have great potential to grow, with talented people and an attractive proposition for financial advisers. Shackleton wanted to find a home that could offer the support and environment to help the business flourish, and we know Liontrust provides this.

We want to thank everyone at HFM and HIS for their tremendous commitment and contribution and look forward to their future development.”

Liontrust will pay £6 million on completion, with two further payments of up to £2 million each due 12 and 24 months afterward. The later payments depend on the acquired business hitting certain run-rate revenue targets, and will be reduced if it does not. Hawksmoor Investment Management is a subsidiary of Shackleton Advisers Limited.

The purchase will be funded entirely from Liontrust’s existing cash, and no new shares will be issued. The deal is expected to close by Dec. 31, subject to customary conditions.

Hawksmoor is profitable, with run-rate revenue of £4.8 million as of Aug. 31. Liontrust said it expects the acquisition to boost its adjusted diluted earnings per share in the financial year ending March 31, 2027, and in later years, before accounting for cost savings.

After integration, the board expects Hawksmoor to reach operating margins of about 60%, before transaction and reorganization costs. Those costs are estimated at about £1.9 million, treated as exceptional items, with roughly 40% falling in the current financial year.

The business comprises three multi-asset funds with £473 million in assets, four fund mandates for advisory clients totaling £1.004 billion, and model portfolio services of £445 million. Ben Conway, head of fund management at Hawksmoor Fund Management, will continue to run the funds and mandates. Richard Philbin manages the model portfolio services.

Liontrust said three of the Hawksmoor funds have performed strongly against peers. The Vanbrugh and Distribution funds ranked in the top quartile of their Investment Association sectors over one, three and five years, while the Global Opportunities Fund ranked in the first or second quartile over the same periods.

The company said the acquisition fits its push into the UK financial adviser market. Platform assets for advisers topped £1 trillion for the first time in the second quarter, up 19% from a year earlier, according to Platforum. Advisers are increasingly outsourcing portfolio construction and investment management to specialist firms.

Hawksmoor’s funds target outcomes such as returns above the Consumer Price Index, which differs from Liontrust’s existing offerings. The funds also have significant exposure to investment trusts and listed alternatives. Liontrust said Hawksmoor’s valuation-led, bottom-up investment approach complements its own multi-asset process.

The deal is Liontrust’s second this year. It completed its purchase of River Global Holdings Limited on June 30, after announcing it in March, and expects to finish integrating that business by the end of December.

Keefe, Bruyette & Woods advised Shackleton on the transaction, with Deloitte handling financial due diligence and Linklaters providing legal advice. K&S Law advised Liontrust.