UK wealth manager Brooks Macdonald Group has acquired Spearpoint, a stock broking and portfolio management provider – the latest sign of the consolidation of the UK wealth management market prior to the Retail Distribution Review.

With this acquisition, Brooks Macdonald and Spearpoint’s combined discretionary funds under management will total about £4.5bn ($7.2bn). Brooks Macdonald said it expects this purchase to be immediately earnings enhancing.

Michael O’Brien, an analyst at Canaccord Genuity told Private Banker International that the earnings enhancement within the year to 30 June 2013 is estimated to be 9.7%. This will see the company’s earnings per share rise to 71.2p per share, from 64.9p per share.

The acquisition is expected to be complete on 19 November 2012 for an initial consideration of £23.1m. This will be paid on a cash free, debt free basis as a combination of cash and equity.


Spearpoint adds scale, offshore and international capability
Additionally, a deferred payment of about £4m will be payable in November 2014, provided Spearpoints’ discretionary funds under management remain at approximately current levels.

In line with Brooks Macdonald’s projections for Spearpoint’s discretionary funds under management during the period up to November 2014, the wealth manager expects to make another deferred payment of £5m, on top of the extra £4m.

Brooks Macdonald CEO, Chris Macdonald said: "The acquisition of Spearpoint is a major step forward for the group and captures an opportunity we have been seeking for a number of years. It adds scale, offshore and international capability together with the acquisition of a strong investment management and pensions team."