The Perth-based team joins BMO as Euroz Hartleys shifts its focus to private wealth and plans a shareholder payout from the sales proceeds.
BMO Financial Group (TSX: BMO, NYSE: BMO) has completed its acquisition of the Australian capital markets business of Euroz Hartleys Group Ltd. (ASX: EZL), expanding the bank’s presence in Australia.
The acquired business includes equities research, institutional sales and trading, equity capital markets, mergers and acquisitions, and strategic advisory. BMO said the Perth team will strengthen its Australian capabilities and improve connections between clients and\ investors across Australia, North America and Europe.
Euroz Hartleys agreed to sell the business for A$145 million in cash in June, subject to customary completion adjustments, according to the ASX filing. The companies have not disclosed the final consideration.
BMO said when it announced the transition that approximately 40 employees from Euroz Hartleys were expected to join BMO Capital Markets upon completion. The bank has operated in Australia since 2004 and has an office in Melbourne.
Shareholders approve sale in October poll
Completion followed an Oct. 16 general meeting at which the sale resolution received 84,672,969 votes in favor (96.24% of votes cast) and 10,236 against, according to the poll results filed with the ASX. Shareholders also approved the proposed capital return and related resolutions.
Euroz Hartelys shifts focus to private wealth
Following the sale, Euroz Hartleys plans to operate as a standalone private wealth firm under the Euroz Hartleys and Entrust brands. The company outlined plans for the business to manage approximately A$5 billion in funds under management and around 60 advisers.
An alliance agreement with BMO has an initial four-year term, renewable for successive two-year terms by mutual agreement. Euroz Hartleys said the agreement is intended to maintain collaboration, research access and distribution links between the two businesses.
Under a separate agreement with the same initial term, the firm will keep its trading, clearing and settlement function and serve the capital markets business, with BMO paying the costs and contributing additional capital. Transitional services will run for an expected initial six to 12 months, depending on the service, at BMO’s expense.
Executive Chairman Andrew McKenzie and Managing Director Tim Bunney were expected to join BMO’s capital markets business after completion, Euroz Hartleys said in June. Both were also expected to remain non-executive directors of Euroz Hartleys for the short to medium term.
Capital return awaits tax ruling
Euroz Hartleys intends to return all post-tax proceeds to shareholders, it said in June. It envisages most of the payout as a fully franked dividend and the rest as a capital return. Net proceeds will be determined after separation and transaction costs, tax on the sale, and completion adjustments.
The proposed capital return also requires an Australian Taxation Office class ruling, which the company expects after completion. It said it will announce the timeline for the capital return to the market in due course.
