Kingswood, the wealth manager and Financial Planner, is to acquire a fledgling Californian investment adviser in a deal worth £3.1m, its second acquisition of a US advisory firm.

The firm will acquire an 85% majority interest  in Chalice Capital Partners, an independent broker/dealer and Chalice Wealth Advisors, a registered investment adviser located in San Diego, California.

AIM-listed Kingswood uses a Financial Planning-approach to wealth management and employs a growing number of Certified and Chartered Financial Planners. It’s advisers use cashflow modelling.

The total deal - subject to US regulatory approval - is worth £3.1m with an initial payment on completion of £800,000.

The 15% remaining interest in Chalice will be retained by senior management.

To fund the deal Kingswood will issue a total of 900,000 convertible preference shares.

Kingswood says Chalice has experienced “robust growth” in the two years it has been operating despite making a loss of £300,000 in its most recent financial year to 31 December 2018.

Chalice has assets under management of £900m and its combined platform has 104 licensed representatives. 

Formed in 2017, the principals of the firm are Keith Gregg and Derek Bruton. Mr Bruton will be the CEO of the acquired businesses.

Kingswood plans to use the two Chalice businesses as a platform for future acquisitions and offerings in the US.

Gary Wilder, Kingswood's group chief executive, said: "We're delighted to announce our second acquisition in the US, following on from Manhattan Harbor earlier this year. 

“The advantages of this new West Coast hub are that it is immediately earnings accretive with a strong management team that has significant experience in roll-up and consolidation strategies.”

Derek Bruton, president of the Chalice platform, said: "Kingswood brings experienced management, deep resources and expansion capital to enable us deliver quality, holistic wealth management services to American clients. I couldn't be happier to work with the Kingswood team on this global growth journey".

Kingswood believes the large US retail wealth market “remains fragmented” and is ripe for expansion and acquisition.

It estimates there are close to 315,000 advisers, with independent broker-dealers controlling £2.3 trillion in AUA and employing 59,000 advisers.

Kingswood is an integrated wealth management group, with more than 7,000 clients and Ј2 billion of assets under management and advice. It employs nearly 130 staff with offices across the UK.

Earlier this year Kingswood added two new board directors following an £80m investment from private equity firm Pollen Street Capital.