Collins Stewart marks profit return with Corazon Capital buy

Collins Stewart has returned to profit and acquired offshore wealth management group Corazon Capital in a deal that could be worth up to £7 million.

Discretionary investment management firm Corazon Capital has £382 million in assets under management with offices in Guernsey and Geneva.

Mark Brown, chief executive of Collins Stewart, said the acquisition was part of the company's strategic drive to increase the size of the wealth management arm, both organically and through acquisitions.

Neil Darke, Head of Collins Stewart's Wealth Management Division, added: 'I am delighted to welcome Corazon's clients and staff to Collins Stewart. This acquisition complements our existing business and enhances both our resources and assets in our Channel Islands heartland whilst strengthening our presence in Geneva.'

The deal has been structured so that Corazon shareholders initially receive £1 million in cash, which will subsequently be followed by a further £6 million in the shape of 8.05 million Collins Stewart shares over a period of three years. However, the share value will be based on the performance over the next 12 months.

Corazon employees includes investment director and chief executive Paul Meader, who was profiled by Citywire in November 2008. In early 2009 the group launched a 'best of breed' fund of hedge funds which aimed to take advantage of the widespread redemptions across the hedge funds to offer access to 25 of the best funds in the sector.

News of the acquisition came after the group unveiled its 2009 results as its chairman Terry Smith prepares to hand over the reigns to Tim Ingram, who will retire as chief executive of Caledonian Investments on 1 April.

Smith is leaving the business in pretty good shape. After recording pre-tax loss of £15.2 million in 2008 the group posted a profit of £18.5 million in 2009. Revenue was up from £175.7 million to £186.4 million.

Despite the turn around Smith remains cautious. He said: 'A more focused business produced a return to profit in 2009 despite tough markets. We expect markets to remain difficult for the foreseeable future but the business is in better shape than for some time.'

The group has not ruled out further acquisitions. Brown said: 'While we continue to manage the business cautiously we are using our robust financial position to take advantage of opportunities to strengthen further our core businesses and reinforce our position as a leading, independent financial advisory group.'

At 8.30am shares in Collins Stewart were down 0.75p to 76p.