EW Group Ltd has acquired the shares in European Wealth Management Group that it does not already own in a deal that values the wealth management business at £13.5m.
This compares with a valuation of £2.1m two years ago when EW Group first invested.
EW Group initially acquired a 33.33% stake in European Wealth in April 2012 in return for 92m shares, raising it to 48.8% one year later through the capitalisation of £822,000 of loans and the acquisition of existing shares in return for 56.8m shares in EW. EW Group is paying £7.1m in shares and convertible loan notes for the rest of the shares.
European Wealth has funds under management of £710m. Management believes that the proposed reforms to UK pensions could provide a significant opportunity for the business. There are also consolidation opportunities in the fragmented sector due to the increasing, and costly, regulation and compliance requirements for financial businesses.
The holding company has changed its name to European Wealth Group Ltd. There was also a 60-for-one share consolidation. Prior to the consolidation the share price was 2.1p so the equivalent is 126p. The share price ended the first day’s trading after the reversal at 107.9p, which values the company at £14.2m.
House broker Daniel Stewart expects European Wealth to be loss-making in 2014 and make a small profit in 2015. Pro forma net debt and deferred consideration was £1.32m at the balance sheet date.
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