Wealth manager Mattioli Woods and troubled Financial Planning firm Kingswood are to merge to create a wealth manager with over £25bn in assets.

Both firms are currently managed and advised by private equity group Pollen Street Capital.

The deal remains subject to FCA approval and is expected to complete later this year.

The combined firm will serve 25,000 clients across the wealth management, Financial Planning and investment management sectors.

A potential rumour had been rumoured for some time.

Kingswood warned recently that it may run out of money to service its £91m debt pile. In recent times it has needed several cash injections to repay loans.

The troubled Financial Planner is currently owned by private equity firm HSQ, part of Pollen Street Capital which has substantial interests in financial services businesses. Pollen Street Capital also manages and advises Mattioli Woods.

Recently HSQ provided a £5m debt facility to support Kingswood's “immediate funding needs.” It said the cash injection would enable Kingswood to “meet its immediate deferred consideration obligations."

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.

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.

Ian Mattioli, CEO of Mattioli Woods, said the wealth manager's plans to grow to £60bn in assets and 300 advisers will be considerably boosted by the deal.

He said: “Our stated long-term ambition is to become a national wealth management firm with £60bn in assets and up to 300 advisers. Combining with Kingswood is a transformational moment and sees us accelerate our journey to achieve these goals.

“This deal brings together two highly complementary businesses with a shared commitment to putting clients first and delivering long-term value. We’ve admired Kingswood’s growth and reputation for some time. Together, we are creating a stronger, more dynamic business that is well-positioned for the future – for our clients and our people.”

Kingswood and Mattioli Woods said the deal would deliver greater scale, a stronger market position and an improved client experience.

Peter Coleman, CEO of Kingswood Group, said: “The combined business will accelerate our journey towards achieving our vision of having the scale to deliver a best-in-class wealth management service to our clients.  This is supported by our market leading DFM and IBOSS brands. 

“I am excited to combine with Mattioli Woods, who have a strong reputation of delivering broader services including group benefits and deep expertise in specialist pensions.”