TriState Capital Holdings entered into a definitive asset-purchase agreement to acquire Chartwell Investment Partners, an investment management firm with over 150 institutional clients and approximately US$7.5 billion in assets under management.
The holding company for TriState Capital Bank has been actively evaluating investment management firms as part of its longstanding strategy to potentially acquire a firm in order to profitably accelerate recurring fee-income growth, while complementing the products and services the Pittsburgh-based bank already offers to financial intermediaries and high-net-worth clients nationwide.
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The purchase will include substantially all of the assets of Chartwell, and TriState Capital believes the acquisition will be approximately 25% accretive to its earnings per share in the first 12 months following completion of the transaction.
James F. Getz, CEO, TriState Capital, said: "Chartwell’s partners and employees have built a world-class investment management firm, and we look forward to supporting their continued growth and success in serving their exceptional institutional clients. The acquisition of Chartwell will enhance TriState Capital’s recurring fee income, provide new product offerings for our national network of financial intermediaries and leverage our financial services distribution capabilities. We are excited that Chartwell has the talent and infrastructure already in place to accommodate significant growth in client accounts and assets for years to come."
TriState Capital has estimated the transaction value to be approximately US$60 million, comprised of a purchase price of approximately US$45 million, payable in cash, and estimated earn-out consideration of approximately US$15 million to be finally determined based on the growth in profitability of Chartwell in 2014.
Up to 60% of the earn-out may be paid in common stock of TriState Capital at its option. The asset purchase transaction is expected to close in the first quarter of 2014, subject to regulatory requirements, obtaining certain Chartwell-client consents and other customary closing conditions.
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By GlobalDataChartwell provides advisory and sub-advisory investment management services primarily to institutional plan sponsors such as public mutual funds, corporations, Taft-Hartley funds, endowments and foundations. Its annual revenues are expected to exceed US$25 million in 2013.
Chartwell has maintained an excellent account retention record since its founding in 1997, and its entire team of more than 40 employees will be joining TriState Capital. The investment management business will become a wholly owned subsidiary of TriState Capital Holdings, and it will continue to operate from its Berwyn, Pa. offices under the Chartwell brand upon completion of the transaction.
Timothy J. Riddle, CEO, Chartwell Managing Partner, said: "We are very pleased to be joining the TriState Capital team. Given TriState Capital’s financial strength and growth culture, its officers’ and directors’ experience in building investment management businesses, and their support for our proprietary, fundamentals-based approach to identifying quality investments, we believe this partnership will be an outstanding fit. Importantly, our clients will continue to be served by the same investment and client service professionals they’ve come to rely on for consistent results and exceptional service, and we look forward to introducing our capabilities to TriState Capital’s financial intermediaries and relationship managers."
TriState Capital’s evaluation of asset management firms was focused on those within its geographic footprint, and the company’s presence in the Greater Philadelphia market will be enhanced by the addition of Chartwell’s office in the Main Line suburbs.
TriState Capital Bank’s Eastern Pennsylvania regional team and representative office will continue to be located in nearby Villanova, Pa.
The board of directors of TriState Capital and the partners of Chartwell have voted in favor of the transaction, which is not subject to approval by TriState Capital shareholders.
TriState Capital’s legal advisor on the transaction is Keevican Weiss Bauerle & Hirsch LLC. Stephens Inc. served as financial advisor and provided a fairness opinion to TriState Capital. Chartwell’s legal advisor is Pepper Hamilton LLP.
