EFG International on Wednesday announced that it would acquire a 51-percent stake in Shaw and Partners to broaden its footprint in Asia-Pacific and strengthen the bank's China offshore business.

EFG International, a global private banking group based in Zurich announced it would pay up to A$61 million for Shaw and Partners via a combination of cash and EFG shares, subject to regulatory approval in Switzerland.  Upon closing, the partnership will provide EFG with immediate access to the Australian market, thereby considerably enlarging its Asia Pacific coverage. 

«With this acquisition, EFG will expand its market position in the Asia Pacific region into Australia, in line with our strategy to focus on markets that offer superior growth potential,» said Giorgio Pradelli, chief executive of EFG International, in a media statement.

The acquisition also allows EFG to strengthen its penetration of the Chinese offshore high net worth individuals (HNWI) market in Australia plus offer its New Capital funds to serve the Australian corporate and pension funds market.

An Established Domestic Player

Shaw and Partners is an established investment and wealth management firm established in Sydney since 1987, with annualized assets under management (AUM) growth rate of approximately 19 percent since 2015, reaching A$ 15.9 billion as at February 2019. It has a network of around 150 financial advisers, and six offices across Australia. 

Post acquisition, Shaw and Partners’ clients, who are mainly invested in Australian equities, could gain access to EFG’s product offering across asset classes and direct access to international markets.

Double In Size

«The combination of Shaw and Partners’ well-established domestic business with access to EFG’s strong international product offering will allow both of us to leverage growth opportunities in this key region. The combined growth potential of this partnership will enable us to double our size in the Asia Pacific region by 2022,» Pradelli added.

The transaction is expected to be accretive for earnings per share from the first year and to have a marginal impact on EFG’s capital ratios, the banking group said. It implies a valuation for 100 percent of shares at 2018 price-to-earnings ratio of approximately 11 times and price-to-AUM ratio of approximately 0.8 percent. 

Co-CEOs to Stay

The two co-CEOs of Shaw and Partners, Earl Evans and Allan Zion, will remain in their executive roles and are expected to jointly hold a 25 percent stake upon closing. «We will continue to target opportunities for the growth and scalability of the firm to both broaden and better our offering to clients,» said Evans.

The acquisition is expected to close during the second quarter of 2019.