HSQ Investment Ltd Kingswood Holdings - Unconditional Cash Offer by HSQ Investment Limited
18/03/2025 07:00
RNS Number : 0922B
HSQ Investment Limited
18 March 2025
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
18 March 2025
KINGSWOOD HOLDINGS LIMITED
("Kingswood" or the "Company")
Unconditional cash offer by HSQ Investment Limited ("HSQ") for those shares in the Company not already held by HSQ
Summary
· HSQ acquired all of KPI's shares in Kingswood at a price of 7p per share on 13 March 2025
· Following the acquisition of KPI's shares, HSQ currently owns 89.39% of Kingswood's issued share capital
· HSQ is announcing an offer to purchase the issued share capital of Kingswood that it does not currently own, for 7p per share
· The offer secures the long-term future of Kingswood and provides all shareholders with the option of liquidity prior to the delisting
Unconditional Cash Offer
1 Introduction
HSQ announces an unconditional cash offer to acquire the entire issued and to be issued ordinary share capital of Kingswood not already held by HSQ at a price of 7 pence per ordinary share (the "Offer").
The Offer will be made through the despatch of the Offer Document and Form of Acceptance, both of which will be posted to Kingswood Shareholders no later than 28 days after the date of this announcement (unless agreed otherwise with the Panel). The Offer Document will contain the formal terms and conditions of the Offer. As the Offer is unconditional from the outset, an accepting Kingswood Shareholder will not be entitled to withdraw an acceptance of the Offer.
2 HSQ's recent acquisition of shares from KPI and the delisting
HSQ acquired all of KPI's 144,125,262 ordinary shares in Kingswood on 13 March 2025 and, as a result, HSQ now owns 89.39% of Kingswood's issued share capital. Having acquired KPI's shares, HSQ confirms that it has requested that the Company cancel the admission to trading on AIM of the Kingswood Shares, with such cancellation proposed to take effect after Day 21 of the Offer. The cancellation date is currently anticipated to be on or around 17 April 2025.
3 Terms of the Offer
Under the terms of the Offer, Kingswood Shareholders will be entitled to receive:
7 pence in cash for each Kingswood Share held
The Offer values the entire issued share capital of Kingswood at approximately £48.03 million on a fully diluted basis. Having regard to the financial profile of the Group, and HSQ's intentions for the Group described in paragraph 9 below, HSQ considers that the Offer provides Kingswood Shareholders with the opportunity to realise their investment in the Company for cash in a scenario where HSQ believes there is limited prospect of any future liquidity for the Kingswood Shares.
The Offer is subject to valid acceptances being received from Kingswood Shareholders but is not subject to any minimum level of acceptance and will be unconditional when made. Certain further terms of the Offer are set out in Appendix 1 of this announcement. No regulatory approvals are required in respect of the making or the acceptance of the Offer. Should the Offer achieve acceptances and/or acquisitions amounting to 90% or more in value of the Kingswood Shares subject to the Offer (excluding Kingswood Shares which are Excluded Shares), HSQ will invoke its statutory rights under part XVIII of the Companies Law to compulsorily acquire any remaining Kingswood Shares not tendered under the Offer, thereby securing 100% ownership of Kingswood.
If, on or after the date of this announcement, any dividend and/or other distribution and/or return of capital is declared, made or paid, or becomes payable in respect of the Kingswood Shares, the cash consideration payable under the terms of the Offer for the Kingswood Shares shall be reduced by an amount equal to the amount of such dividend and/or other distribution and/or return of capital, in which case any reference in this announcement or in the Offer Document to the cash consideration payable under the terms of the Offer will be deemed to be a reference to the cash consideration as so reduced. In such circumstances, the relevant Kingswood Shareholder will be entitled to receive and retain such dividend and/or other distribution and/or return of capital. Any revision of the Offer price referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Offer.
It is expected that the Offer Document will be published as soon as practicable and, in any event, no later than 28 days after the date of this announcement (unless agreed otherwise with the Panel). The Offer Document will contain the formal terms of the Offer.
Panmure Liberum, in undertaking the cash confirmation exercise for HSQ, confirms that it is satisfied that sufficient resources are available to HSQ to enable it to satisfy the full cash consideration under the terms of the Offer.
4 Recommendation
The Independent Kingswood Directors, who have been so advised by Cavendish as to the financial terms of the Offer, consider the terms of the Offer to be fair and reasonable. Cavendish is providing independent financial advice to the Independent Kingswood Directors for the purposes of Rule 3 of the Takeover Code. In providing its financial advice to the Kingswood Independent Kingswood Directors, Cavendish has taken into account the commercial assessments of the Independent Kingswood Directors.
5 Background to, and reasons for, the recommendation of the Offer by the Independent Kingswood Directors
The committee of Independent Kingswood Directors
Lindsey McMurray, non-executive director, and Duncan Gerard, non-executive director, are representatives on the Kingswood Board of Pollen Street Capital Limited ("Pollen Street"), the investment manager of funds which are the ultimate owners of HSQ Investment Limited ("HSQ"). Accordingly, each of Lindsey McMurray and Duncan Gerard have not participated in the appraisal of the Offer, as they cannot be considered independent on this matter.
The Board of Kingswood therefore constituted a committee of the five remaining Independent Kingswood Directors (also excluding Gary Wilder and Jonathan Massing having recused themselves from any discussions on the Offer prior to their subsequent resignation as directors) for the purposes of carefully evaluating and ultimately recommending the Offer (the "Independent Kingswood Directors").
Background
Kingswood is an international, fully integrated wealth and investment management group. It is a trusted provider of wealth planning and investment management solutions to clients, underpinned by investment in people and innovation in technology that supports its advisers and clients. The Company has wholly-owned wealth management operations in the UK and majority-owned wealth management operations in Ireland and also a 50.1% interest in Kingswood US, LLC ("KWUS"), a financial services business in the USA providing wealth management, investment banking, equity research and advisory solutions.
Since listing in 2014, the Company has pursued a strategy of organic and inorganic growth, recognising the opportunities created by the sector dynamics in the wealth management and financial planning space to expand the Company's product offering and geographical presence. To provide the funding support to enable an accelerated acquisition led growth strategy, the Company obtained a commitment of up to £80m from Pollen Street in 2019. This investment was provided through HSQ. This commitment was satisfied by the issue of convertible preference shares that had the right to convert into Kingswood Shares. With the funding from HSQ, together with a debt facility subsequently put in place in October 2022, the Company has been able to complete 19 acquisitions since 2019, including the acquisition of the 50.1% interest in KWUS. This strategy has seen Assets under Advice and Management ("AUA&M") increase from £2.5bn at 31 December 2019 to £12.3bn at 31 December 2023 and revenues increase from £10.1m to £86.2m over the same period. As at 31 December 2024, the Group's AUA&M was circa. £13.1bn.
The Company now provides a holistic wealth management offering, encompassing a comprehensive, financial planning, mortgage and investment proposition across UK and Ireland serving both retail and corporate clients. An experienced and effective management team is in place, and the Board believes that there is substantial potential, with the appropriate levels of investment, to build both scale and value across the business. A strong risk culture underpins these ambitions of growth.
On 31 May 2024, it was announced that HSQ had converted all of its convertible preference shares into Kingswood Shares, resulting in HSQ being beneficially interested in 68.39%. of the Company's issued share capital.
Notwithstanding the Company's growth in revenues and AUA&M, the Company's performance has been impacted by the headwinds seen across the sector over the last couple of years. This has resulted in the Company's growth not being as strong over the period as management had expected. In conjunction with this, the acquisition strategy has seen the Company's debt position increase significantly over the last two years, rising from a net cash position of £39.7m to a net debt position of £48.1m as at 31 December 2023. Between 1 February 2024 and 31 December 2024, HSQ and/ or Pollen Street provided the Company with a further £21m through additional loans to enable the Company to meet its obligations in relation to deferred consideration due from previous acquisitions and in relation to interest payments due on its senior debt facility.
As at 31 December 2024, the unaudited gross debt in the Company from its senior debt facility, outstanding leases and the loans provided by HSQ and/or Pollen Street since February 2024 amounted to, in aggregate, £91.6m and the unaudited net debt of the Company was circa. £73.2m. As at 31 December 2024, the Company also had additional expected deferred consideration obligations over the next 12 months and additional obligations in respect of its revolving credit facility. Having regard to the trading position of the Company, these obligations would not be able to be satisfied through the operating cash flows of the Company and, unless alternative sources of capital were obtained, HSQ would need to remain the ultimate funder to enable the Company to meet these obligations. As announced on 12 March 2025, HSQ confirmed that they continued to be supportive of the business but believed that this was most appropriate from a position as sole institutional shareholder alongside the Company moving to an unlisted, private company setting and therefore they have stated that they would be willing to provide the required near-term funding only on this basis.
On 13 March 2025, HSQ acquired the interests of KPI and following that acquisition, HSQ provided a further loan facility which enabled the Company to satisfy its immediate deferred consideration obligations.
Prior to the acquisition of the KPI stake by HSQ, the Independent Kingswood Directors were strongly of the view that there was no near term credible funding route for the Company other than the continued financial support from HSQ. In reaching this view, the Independent Kingswood Directors had considered a full range of potential alternative options including but not limited to equity financing, additional external debt funding, accelerated realisation of businesses or assets, and third party potential suitors for the Company as a whole. The Independent Kingswood Directors concluded that, given factors such as the size of the HSQ shareholding, the debt owed by the Company (including to HSQ) and the terms of the Make Whole Instrument (which provides a guaranteed level of return to HSQ of approximately £140.1m), none of such options were deliverable (either at all or in any meaningful timescale) and that there could be no certainty as to the remaining value from these alternatives that would be attributable to the Kingswood Independent Shareholders and whether such value would be in excess of the 7p per Kingswood Share available under the Offer.
The Independent Kingswood Directors are also mindful that HSQ now owns 89.39% of the Company's issued share capital and that they are therefore seeking to cancel the listing of the Company on AIM, meaning that any shareholders not accepting the Offer would be minority shareholders in an unlisted Guernsey company.
Conclusion
As required by the Code, the Independent Kingswood Directors, together with their financial adviser Cavendish, have carefully considered and evaluated the financial terms of the Offer. Cavendish is providing financial advice to the Independent Kingswood Directors under Rule 3 of the Code.
The Independent Kingswood Directors recognise that the Offer represents an opportunity for Kingswood Shareholders to realise their entire existing holdings in Kingswood for cash.
The Independent Kingswood Directors have also, in addition to considering the various matters described above, carefully evaluated HSQ's intentions regarding the conduct of the Kingswood business under HSQ's ownership.
In light of that assessment and also taking into account the financial advice received from Cavendish, the Independent Kingswood Directors intend to recommend unanimously that Kingswood Shareholders accept the Offer (as those Independent Kingswood Directors who hold Shares intend to do in respect of their own shareholdings).
6 The Memorandum of Understanding between HSQ and KPI
The previous arrangements
On 30 September 2019, and as described in previous announcements, including on 31 May 2024, Kingswood issued a promissory note to HSQ (the "Make Whole Instrument") which was structured to provide PSC with a guaranteed return on its investment in convertible preference shares. Pursuant to this agreement, which was subsequently modified on 28 December 2021, upon a sale of HSQ's shares in Kingswood, HSQ had a guaranteed minimum return of an amount equal to two times the total amount subscribed for their convertible preference shares prior to 28 December 2021 and an amount equal to one and a half times the total amount subscribed for their convertible preference shares on or after 28 December 2021. The aggregate level of return guaranteed by Kingswood to HSQ under the Make Whole Instrument is approximately £140.1m.
Separate to its shareholding in Kingswood, KPI holds an additional economic interest in Kingswood via HSQ, pursuant to a side letter entered into in December 2019 (the "Side Letter"). Pursuant to the Side Letter, KPI paid HSQ £5 million in exchange for an economic interest in a portion of the convertible preference shares that HSQ had at that time subscribed for in Kingswood (the "Trust Shares"). HSQ agreed in the Side Letter to hold the Trust Shares on trust for, and to pay any proceeds relating to the Trust Shares to, KPI. On 31 May 2024, it was announced that HSQ had converted all of its convertible preference shares into Kingswood Shares resulting in HSQ being beneficially interested in 68.39% of the Company's share capital. The Side Letter remains in force and, as a result, KPI has a continuing economic interest of approximately 7% in HSQ's shareholding in Kingswood and also a 7% interest in HSQ's rights under the Make Whole Instrument.
Finally, as part of the commercial arrangements agreed between HSQ and KPI at the time of the Side Letter, a call option dated 28 February 2020 between HSQ and KPI was entered into (the "Call Option"). Under the Call Option, were HSQ to achieve a certain level of return in connection with its investment in Kingswood, KPI was entitled to be awarded options over HSQ's shares in Kingswood that would in turn entitle KPI to certain proceeds from HSQ on any eventual sale of HSQ's shares in Kingswood.
As a result, whilst KPI has sold its shares in Kingswood to HSQ, it retained an economic interest in Kingswood through its interests in HSQ's shares in Kingswood, the Make Whole Instrument and the Call Option. These arrangements are proposed to be amended as set out below.
The amended arrangements
On 26 February 2025, HSQ and KPI entered into a binding memorandum of understanding (the "MOU") that sets out the proposed terms to reconstitute the existing entitlements due to KPI under the Side Letter and the Call Option (the "Amendment").
The Amendment provides that in respect of any future proceeds distributed by HSQ, KPI is entitled to the following:
a. KPI shall receive 7% of the proceeds arising and distributed to HSQ following the sale of the UK and Irish business (whether as a result of the Make Whole Instrument or otherwise) (the "First Amount");
b. KPI shall receive 7% of the historic unpaid interest due by Kingswood to HSQ on HSQ's historic shareholding of convertible preference shares in Kingswood (the "Second Amount");
c. any amounts paid to HSQ by Kingswood in excess of the amounts received from paragraph (a) above and, to the extent distributed, paragraph (b) above up to $50 million (the "Third Amount") will be distributed by HSQ in the following proportion: 90% to PSC and 10% to KPI;
d. any amounts in excess of the First Amount, the Second Amount and the Third Amount will be distributed by HSQ in the following proportion: 93% to PSC and 7% to KPI.
In addition, under the terms of the MOU, KPI shall have a put right under which it can require Pollen Street to acquire all of KPI's interests in HSQ for the lower of: (i) USD 5.25 million or (ii) an amount calculated pursuant to a formula derived from the future value of Kingswood US. The put right is only exercisable 3 years after the date of the MOU. The price will be reduced by any proceeds received by KPI, pursuant to its interests in HSQ, that are in excess of the First Amount, by the time of exercise (and the exercise of the put option will extinguish those rights to any further proceeds going forward).
Acquisition of KPI's shares by HSQ
HSQ acquired all of KPI's shares in Kingswood on 13 March 2025 at a price of 7p per share and as a result HSQ now owns 89.39% of Kingswood's issued share capital. Having now acquired KPI's shares, it is anticipated that the binding documentation in relation to the terms set out in the MOU will be completed shortly. Gary Wilder and Jonathan Massing resigned from the Board on 13 March 2025, when HSQ acquired all of KPIs shares in Kingswood.
The Independent Kingswood Directors' views relating to the Amendment
The Independent Kingswood Directors note that because:
· the Company's current indebtedness exceeds the existing equity value of the Company and the value implied to the Company by the Offer; and
· there can be no certainty as to the likelihood of a future sale of the Company or its underlying assets nor as to the valuation achieved on any such sale; and
· HSQ's shareholding following the acquisition of the Kingswood Shares previously held by KPI, will (regardless of the outcome of the Offer) be such that any decisions regarding the future strategy and any decisions that may or may not trigger payments under the Make Whole Instrument will be subject to HSQ's controlling influence
there can be no certainty that any payments will be required under the Make Whole Instrument, and therefore, what future economic benefit (if any) KPI may or may not receive as a result of the Amendment in excess of that to which it is entitled pursuant to its existing arrangements with HSQ. For this reason, neither the Independent Kingswood Directors nor Cavendish are able to form any clear view on the financial terms of the Amendment nor as to the future value, if any, that may be payable or receivable subsequent to the Amendment (save that the Independent Kingswood Directors note the put right afforded to KPI which, if exercised provides to KPI an amount that is the lower of: (i) USD 5.25 million or (ii) an amount calculated pursuant to a formula derived from the future value of Kingswood US (subject to a reduction for any proceeds already received by KPI, pursuant to its interests in HSQ, that are in excess of the First Amount, by the time of the exercise of the put option)).
As noted in the paragraph setting out the background to and reasons for the Independent Kingswood Directors' recommendation for the Offer, the Company has a significant debt burden and has near term deferred consideration obligations and additional debt obligations that require urgent funding without which the Company would be unable to meet its obligations. Since February 2024, HSQ has provided the capital required by the Company to meet its obligations in the form of additional loans to the Company. HSQ had informed the Independent Kingswood Directors that HSQ was only willing to provide further capital support from a position of sole institutional shareholder which was conditional on its acquisition of the KPI Shares which occurred on 13 March 2025. Absent that immediate funding support from HSQ, Kingswood would have been unable to continue trading as a going concern.
The Independent Kingswood Directors are of the view that in these circumstances that, notwithstanding that the terms of the Amendment will not extend beyond KPI and HSQ, Independent Kingswood Shareholders should be offered the opportunity to exit their investment on the same terms as KPI at 7 pence per share, a value that the Independent Kingswood Directors, having been so advised by Cavendish as to the financial terms, consider to be fair and reasonable. Cavendish has taken into account the Independent Kingswood Directors' commercial assessments in forming this view.
As required by, and solely for the purposes of, Rule 16.1 of the Code, Cavendish (in its capacity as independent adviser to Kingswood for the purposes of Rule 3 of the Code) considers that the entry into the Amendment is fair and reasonable, so far as the Independent Kingswood Shareholders are concerned. In forming this view, Cavendish has taken into account the commercial assessments of the Independent Kingswood Directors as set out above.
Save as set out above, and the irrevocable undertakings entered into by the Independent Kingswood Directors, there are currently no arrangements or understandings between HSQ and/or KPI and/or Kingswood (or persons acting in concert with any of HSQ, KPI, or Kingswood) having any connection with or dependence upon the Offer.
7 HSQ's views as to the considerations as to whether or not to accept the Offer
In considering the Offer, HSQ believes that Kingswood Shareholders should consider the financial position of the Group as detailed in paragraph 10 below and the proposed future strategy for the Company as detailed in paragraph 9 below. Further, HSQ believes that Kingswood Shareholders should balance their desire for an immediate cash realisation now with:
· the current level of liquidity in the Company's shares and their current ability to realise their holdings in the Group;
· the current level of indebtedness of the Company, which was £73.2m as at 31 December 2024; and
· the Kingswood Shares no longer being able to trade on AIM once the De-Listing (as described in paragraph 16 below) occurs and the consequent impact on future marketability.
If Kingswood Shareholders are in any doubt as to what action they should take, they should seek their own independent professional advice from their stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000, as amended, if they are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
8 Irrevocable undertakings
HSQ has received irrevocable undertakings from the following Independent Kingswood Directors: David Hudd and Jonathan Freeman in respect of, in aggregate, 737,750 Kingswood Shares (representing, in aggregate, approximately 0.11% of the Kingswood Shares as at the Last Practicable Date).
In addition to the irrevocable undertakings given by the Directors listed above, HSQ has also received irrevocable undertakings from Gary Wilder and Jonathan Massing in respect of 1,115,001 and 350,000 Kingswood Shares respectively (representing, in aggregate, approximately 0.21% of the Kingswood Shares as at the Last Practicable Date).
HSQ has therefore received indications of support to accept, or to procure the acceptance of, the Offer in respect of a total of 2,202,751 Kingswood Shares, representing, in aggregate, approximately 0.32% of the Kingswood Shares as at the Last Practicable Date. Together with the Kingswood Shares already held by HSQ, this represents approximately 89.71% of the Kingswood Shares as at the Last Practicable Date.
Further details of these irrevocable undertakings (including the circumstances in which they cease to be binding) are set out in Appendix 3 to this announcement.
9 HSQ's intentions for Kingswood's business, directors, management, employees, pensions and locations
Intentions for business
HSQ initially invested in Kingswood in September 2019, providing up to £80m of growth equity capital to the business to pursue Kingswood's strategy of creating the leading UK advice led wealth management consolidator. Since the HSQ investment in 2019, the management team has completed 19 acquisitions, funded utilising the HSQ growth equity capital and financial debt provided by a large asset manager. The business is now positioned as a vertically integrated platform of scale in the UK, and as at 30 June 2024, Group assets under advice and management ("AUA&M") were approximately £12.9bn.
Over the last 12 months, in order to satisfy the working capital obligations of the Company (including to meet deferred payment obligations relating to historic acquisitions completed by the Company and debt interest payments). HSQ, or affiliates of HSQ, have provided the Company with additional loans, amounting to in aggregate £25.8m. As at 31 December 2024, the unaudited gross debt in the Company from its senior debt facility, outstanding leases and the loans provided by HSQ and/or Pollen Street amounted to, in aggregate, £91.6m. Having regard to the trading of the business, HSQ believes that this level of indebtedness is too great for the Group. Therefore, to ensure the long term success for Kingswood, its employees and clients, following the completion of the Offer pursuant to which the Kingswood Shareholders will have had the opportunity to realise their investment in the Company, HSQ intends to pursue a sale of the UK and Ireland operations, and has agreed in the MOU that they will use all reasonable endeavours to arrange for a sale of such business as soon as reasonably practicable. Although no offer has been received, HSQ and Pollen Street intend to consider a merger of the Company's UK and Ireland business with another wealth management company that is an existing portfolio company of funds managed and advised by Pollen Street. HSQ believes that this has the prospect of delivering the long-term capital investment that the UK and Ireland operations requires which would provide all advisers and clients within these businesses an exciting opportunity for growth.
If such a sale were pursued and completed, the sale proceeds would first be applied to satisfying the Group's existing third-party debt facility, the various additional debt instruments that have been provided by Pollen Street and/ or HSQ and satisfaction of the contingent liability under the Make Whole Instrument, as detailed at paragraph 6 above. Given the circumstances described in paragraph 6 above, there could be no guarantee of any value attributable to the Kingswood Shares.
The investment that the Group has in Kingswood US, LLC will continue to focus on organic growth over the next twelve months with no material change to its business model being considered.
The statements contained in this section do not constitute post-offer undertakings under Rule 19.5 of the Takeover Code.
Intentions for directors, management and employees
The independent non-executive directors intend to resign from the board on the cancellation of admission of the Kingswood Shares to trading on AIM.
HSQ recognises that Kingswood is a people business, and it is important to offer long term security and certainty to all stakeholders. As at the date of this announcement, no firm decisions have been made by HSQ with respect to any specific actions which may be taken in relation to the Company's management or employees.
As at the date of this announcement, HSQ does not intend to make any material change to the conditions of employment or in the balance of the skills and functions of the employees and management. If a sale of the UK and Ireland business is sold as a separate division, it is expected that a review of certain central functions of the Company would be undertaken, which may result in rationalisation within certain of the central functions.
As at the date of this announcement, HSQ does not intend to make any changes to the continued employment of the directors or employees of Kingswood US, LLC.
Intentions for pensions
As at the date of this announcement, HSQ does not intend to make any changes to the contributions rate, the accrual of benefits for existing members or the rules applicable to the admission of new members that currently applies to the Company's defined contribution pension plans. Pension rights of employees and former employees of the UK and Ireland businesses will be protected in accordance with applicable laws.
Intentions for locations of business
As at the date of this announcement, HSQ does not intend to make any changes to the location of the Company's headquarters or the functions carried out at the Company's headquarters, however, if there is a sale of the UK and Ireland business this may change, as referred to above.
Intentions for fixed assets
As at the date of this announcement, HSQ does not intend to make any changes to the Company's fixed assets, and there is no intention to redeploy any of the fixed assets to another location.
Intentions for research and development
As at the date of this announcement, the Company has no expenditure on research and development, which HSQ does not intend to change.
Intentions for the existing trading facilities for the relevant securities of Kingswood
It is intended that, on the date of this announcement, Kingswood will also make an application to the London Stock Exchange for the cancellation of admission of the Kingswood Shares to trading on AIM, as detailed further in paragraph 16 below.
10 Information relating to Kingswood
Kingswood is a non-cellular company incorporated in Guernsey with company number 42316. Kingswood is an international, fully integrated wealth and investment management group. It is a trusted provider of wealth planning and investment management solutions to clients, underpinned by investment in people and innovation in technology that supports its advisers and clients.
Kingswood offers a range of investment solutions to its clients included investment advice and management, the management of personal and company pensions and wealth planning. The Company has a network of 22 offices across the UK as well as overseas offices in the USA, Ireland and South Africa.
In the accounts for the year ended 31 December 2023, published in June 2024, the Company reported Group revenue of £86.2m split as follows:
· UK & Ireland revenues of £46.6m; and
· US revenues (the Company has a 50.1% interest in Kingswood US, LLC which accordingly is fully consolidated into Group reporting) of £39.6m.
For the year ended 31 December 2023, the Group reported a loss before tax of £13.3 million.
For the six months ended 30 June 2024, announced on 30 September 2024, the Group reported revenue of £40.6 million split as follows:
· UK & Ireland revenues of £23.4m; and
· US revenues of £17.2m
For the six months to 30 June 2024 the Group reported operating profit of £6.1m and a statutory loss before tax of £5.9m.
11 Information relating to HSQ
HSQ is a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street Capital Limited ("Pollen Street"). Pollen Street is a global, independent alternative asset investment management company focused on the financial and business services sectors. It was established in 2013 and now has over £5 billion gross AUM across private equity and credit strategies.
12 Information relating to KPI
KPI was established in 2006 and is owned by Kingswood Property Finance Limited Partnership, a private investment partnership wholly owned by Gary Wilder and Jonathan Massing with a focus on long-term strategic investments in financial services and other sectors.
13 Kingswood Shares to which the Offer relates
The Offer shall extend to all of the Kingswood Shares not already owned by HSQ, which represent approximately 10.61% of Kingswood's existing issued ordinary share capital. As the Offer is unconditional from the outset, an accepting Kingswood Shareholder will not be entitled to withdraw an acceptance of the Offer.
For the avoidance of doubt, the Offer shall extend to any Kingswood Shares which are unconditionally allotted and/or issued and fully paid (or credited as fully paid) on or before the date on which the Offer closes. This will include Kingswood Shares arising pursuant to the exercise of options under the Kingswood share plans.
Participants in the Kingswood share plans will be contacted regarding the effect of the Offer on their rights under the Kingswood share plans.
14 Financing the Offer
The cash consideration payable to Kingswood Shareholders under the terms of the Offer will be financed from debt funding to be invested into HSQ by Pollen Street group entities.
Panmure Liberum, in undertaking the cash confirmation exercise for HSQ, is satisfied that sufficient resources are available to HSQ to satisfy in full the cash consideration payable to Kingswood Shareholders under the terms of the Offer.
15 Offer structure and timetable
It is intended that the Offer will be implemented by way of a takeover bid within the meaning of Part XVIII of the Companies Law, the provisions of which will be set out in full in the Offer Document. HSQ will make the Offer through the despatch of the Offer Document and Form of Acceptance, both of which will be posted to Kingswood Shareholders no later than 28 days after the date of this announcement (unless agreed otherwise with the Panel). The Offer Document will contain the formal terms of the Offer and a full expected timetable of principal events. At present the following timetable is anticipated:
| Posting of Offer Document | 25 March 2025 |
| Day 21 | 15 April 2025 |
| Cancellation of trading of the Kingswood Shares on AIM | 17 April 2025 |
| Name | Nature of interest | Number of Kingswood Shares interested in | Interest as a percentage of issued Kingswood Shares |
| HSQ | Owner of Kingswood Shares | 613,388,553 | 89.39% |
| Enquiries: | |
| HSQ Duncan Gerard | Tel: +44 (0)203 728 6750 |
| Kingswood David Hudd / Peter Coleman | Tel: +44 (0)20 7293 0730 |
| Cavendish Capital Markets Limited, Rule 3 adviser, nominated adviser and corporate broker to Kingswood Marc Milmo/ Henrik Persson /Isaac Hooper | Tel: +44 (0)20 7220 0500 |
| Greentarget, public relations adviser to Kingswood Jamie Brownlee/ Ellie Basle | Tel: +44 (0)20 7324 5498 |
| Name | Registered Holder | Number of Kingswood Shares | % of Voting Shares as at the date of this announcement |
| David Hudd | W B Nominees Limited | 650,000 | 0.09 |
| Jonathan Freeman | Hargreaves Lansdown (Nominees) Limited | 87,750 | 0.01 |
| TOTAL | - | 737,750 | 0.10 |
| Beneficial Holder | Registered Holder | Number of Kingswood Shares | % of Voting Shares as at the date of this announcement | |
| Gary Wilder | Seguro Nominees Limited | 1,115,001 | 0.16 | |
| Jonathan Massing | Interactive Investor Services Nominees Limited | 350,000 | 0.05 | |
| TOTAL | - | 1,465,001 | 0.21 | |
| AIM | the market of that name operated by the London Stock Exchange; |
| AIM Rules | the AIM Rules for Companies published by the London Stock Exchange, as amended from time to time; |
| announcement | this announcement of which the appendices form part; |
| Articles | the memorandum and articles of incorporation of the Company from time to time; |
| AUA&M | assets under advice and management |
| Business Day | a day (other than Saturdays, Sundays and public holidays in the United Kingdom) on which banks are generally open for business in London and Guernsey; |
| Cavendish | Cavendish Capital Markets Limited; |
| Code or Takeover Code | the City Code on Takeovers and Mergers; |
| Companies Law | the Companies (Guernsey) Law, 2008, as amended; |
| CREST | the relevant system (as defined in the Regulations) in respect of which Euroclear UK & International Limited is the Operator (as defined in the Regulations); |
| Day 21 | the 21st day following the date on which the Offer Document is published, being the minimum period for which the Offer must remain open for acceptance in accordance with the Code; |
| De-Listing | the cancellation of admission of the Kingswood Shares to trading on AIM; |
| De-Listing Application | the application made by Kingswood on the date of this announcement to the London Stock Exchange for cancellation of admission of the Kingswood Shares to trading on AIM; |
| Dealing Disclosure | as defined in the Takeover Code; |
| Directors or Board | the directors of the Company or any duly authorised committee thereof, and "Director" means any one of them; |
| Excluded Shares | means: (a) shares held as treasury shares; (b) shares held by HSQ; (c) shares held by a nominee of HSQ; (d) shares held by a holding company, subsidiary or a fellow subsidiary of HSQ or a nominee of such a holding company, subsidiary or fellow subsidiary; (e) a body corporate in which HSQ is substantially interested; (f) a person who is, or is a nominee of, a party to a share acquisition agreement with HSQ; or (g) shares acquired by HSQ during the offer period at a price other than the offer price save where the offer price is raised to match the offer price; |
| FCA | the Financial Conduct Authority or its successor from time to time; |
| fellow subsidiary | has the meaning ascribed to it in the Companies Law; |
| Form of Acceptance | the form of acceptance relating to the Offer which, where appropriate, will accompany the Offer Document; |
| Group | Kingswood and its subsidiaries; |
| hard copy form | a document, an announcement or any information will be sent in hard copy form if it is sent in a paper copy or similar form capable of being read; |
| holding company | has the meaning ascribed to it in the Companies Law; |
| HSQ | HSQ Investment Limited, a private company incorporated in England and Wales with registered number 12156807; |
| Independent Kingswood Directors | the independent Kingswood directors of the Board being, Peter Coleman, Jonathan Freeman, Gemma Godfrey, David Hudd, and Jane Millar; |
| Independent Kingswood Shareholders | the Kingswood Shareholders other than HSQ, Jonathan Massing and Gary Wilder |
| Kingswoodor the Company | Kingswood Holdings Limited, a non-cellular company incorporated in Guernsey with company number 42316; |
| Kingswood Shareholders | holders of Kingswood Shares; |
| Kingswood Shares | ordinary shares in the capital of Kingswood; |
| KPI | KPI (Nominees) Limited, a private company incorporated in England and Wales with registered number 05723493; |
| Last Practicable Date | close of business on 17 March 2025, being the Business Day immediately prior to the date of this announcement; |
| London Stock Exchange or LSE | London Stock Exchange plc or its successor from time to time; |
| Offer | the offer to be made by HSQ to acquire the Kingswood Shares subject to the terms and conditions described in this announcement and the further terms to be set out in the Offer Document and, in the case of certificated Kingswood Shares, the Form of Acceptance and, where the context so requires, any revision, variation, extension or renewal of such offer; |
| Offer Document | the formal document setting out the full terms and conditions of the Offer, to be posted to Kingswood Shareholders (other than certain Overseas Shareholders); |
| Offer Period | the offer period (as defined in the Takeover Code) relating to the Company that commenced on 12 March 2025 and ending no earlier than 15 April 2025; |
| Opening Position Disclosure | has the meaning given to it by Rule 8 of the Takeover Code; |
| Overseas Shareholders | any Kingswood Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom or Guernsey; |
| Panel | the Panel on Takeovers and Mergers; |
| Pollen Street | Pollen Street Capital Limited, a private company incorporated in England and Wales with registered number 08741640; |
| Regulatory Information Service | the regulatory information service as defined in the handbook of rules and guidance made by the FCA; |
| Restricted Jurisdiction | any jurisdiction where the making of the Offer would: (a) constitute a violation of the relevant laws and regulations of such jurisdiction; or (b) result in a requirement to comply with any governmental or other consent or any registration, filing or other formality which HSQ or Kingswood regards as unduly onerous; |
| subsidiary | has the meaning ascribed to it in the Companies Law; |
| UK or United Kingdom | the United Kingdom of Great Britain and Northern Ireland; and |
| US or United States | the United States of America, its territories and possessions, any state of the United States, the District of Columbia and all other areas subject to its jurisdiction. |
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