Strategic View: Oaktree Capital Management acquires Close Brothers Asset Management (CBAM) for up to £200 million in a deal providing Close Brothers Group with approximately 100 basis points CET1 capital ratio improvement. Transaction represents 27x CBAM’s statutory operating profit after tax for FY2024.
Full story: When banks need capital fast, PE swoops in. Close Brothers Group sold its wealth management arm, CBAM, to Oaktree Capital Management for £200 million (including £28 million contingent consideration). This is a Balance Sheet Optimization Club—Close Brothers needed to strengthen capital ratios amid regulatory pressure and motor finance uncertainties, while Oaktree saw an opportunity to acquire £5+ billion in assets under management at attractive multiples.
CBAM manages discretionary portfolios for high-net-worth individuals, charities, and institutions—sticky, fee-generating assets that throw off predictable cash flows. The business had become non-core for Close Brothers, which wanted to focus on specialist lending and banking services. For Oaktree, which also owns Atomos (another UK wealth manager), this acquisition creates platform synergies and scale advantages in a fragmented market ripe for consolidation.
The deal structure is clever: £146 million upfront cash, plus a £26 million dividend from CBAM to Close Brothers before closing, plus £28 million in preference shares contingent on performance. This deferred consideration aligns incentives—Oaktree benefits if CBAM grows AUM and profitability, while Close Brothers participates in upside. The transaction boosts Close Brothers’ CET1 ratio by 100 bps, providing breathing room to navigate the motor finance investigation that had spooked investors.
This deal exemplifies Financial Services Disaggregation—universal banking models are fracturing as firms focus on core competencies and shed non-strategic assets. For club investors in wealth management platforms, the opportunity is clear: consolidate subscale players, implement shared technology infrastructure, and capture margin expansion through operating leverage. Expect Oaktree to bolt on 3-4 more UK wealth managers over the next 24 months, creating a top-10 player with £20+ billion AUM.
Summary: Oaktree’s £200 million CBAM acquisition is a capital-relief club deal where Close Brothers sheds non-core wealth management to strengthen its balance sheet, while Oaktree builds a wealth consolidation platform. The contingent consideration structure aligns interests and reflects confidence in the UK wealth management market despite macro headwinds.
Source: Close Brothers PDF, Investment Week
