UK-based merchant banking group Close Brothers Group is set to sell its wealth management business Close Brothers Asset Management (CBAM) in a bid to strengthen its capital base.
The business will be acquired by funds managed by Oaktree Capital Management for an equity value of up to £200m.
As agreed, Oaktree will pay £172m in cash at or before completion of the transaction. The amount includes an upfront cash consideration of approximately £146m and a dividend of approximately £26m payable by CBAM to Close Brothers, subject to necessary regulatory capital requirements.
Close Brothers Group will also be entitled to £28m of contingent deferred consideration in the form of preference shares.
According to a company statement, the upfront proceeds would boost the Close Brothers Group’s common equity tier 1 (CET1) capital ratio by around 100 basis points on a pro forma basis.
The divestment will also enable Close Brothers to focus on its core lending business.
Close Brothers chairman Mike Biggs said: “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.”
Oaktree managing director Federico Alvarez-Demalde said: “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.”
The deal is expected to complete early next year, subject to certain customary regulatory approvals.
