Private equity firm HSQ has injected a further £4.8m to support its troubled Financial Planning business Kingswood which warned recently that it may run out of money to service its £91m debt pile.
HSQ confirmed on Friday that it would provide a near £5m debt facility to support its Kingswood business's “immediate funding needs.”
HSQ is part of Pollen Street Capital and has substantial interests in financial services businesses.
Last week HSQ increased its shareholding in Kingswood to nearly 90% to take near full control of the firm which has expanded rapidly through acquisition but struggled to manage its debts.
Two long standing directors, non-exec deputy chairman Jonathan Massing and ex-CEO Gary Wilder, both stepped down last week and have sold their near 21% shareholding to HSQ. They will remain minor shareholders.
The new debt facility will mean HSQ providing up to £4.8m in loans with an interest rate of 12% paid at maturity. The repayment date is 29 October 2030 or in the event of a full or partial exit.
HSQ says the cash injection will enable Kingswood to,“meet its immediate deferred consideration obligations."
Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) wealth manager looking after about £12bn of assets under advice and management. It services 19,000 clients from offices across the UK with overseas offices in Ireland, South Africa and the US.
HSQ already owned 68.4% of Kingswood shares until recently but said last week it would bid for the rest of the business at 7p a share. It now owns nearly 90% of shares.
Kingswood has borrowed heavily to fund expansion and has needed several cash injections to repay loans.
Kingswood has seen strong growth in revenues and AUA/M since 2019 but admitted recently its performance had been hit by “headwinds” it says have also been seen across the sector.
As at 31 December, the unaudited gross debt of Kingswood from its senior debt facility, and the loans provided by HSQ and/or affiliates of HSQ since February 2024, amounted to £90.7m.
Kingswood has acquired more than 20 firms, many of them Financial Planning businesses in a rapid expansion drive in recent years.
David Lawrence, Kingswood’s CEO, quit the firm last July after overseeing much of the expansion. He was replaced by ex-Positive Solutions CEO and Chartered Accountant Peter Coleman as interim CEO.
