In an ASX statement, the firm said it has entered into a binding term sheet with an external firm operating under its own AFSL to purchase a retail client book, including client servicing rights and associated revenue stream.
The details of the purchaser were not disclosed to the market.
Three Clime staff will transition over to the external firm with settlement expected to occur by 19 December.
The agreed consideration is for $1.6 million with $0.4 million cash consideration to be received within 90 days of completion and a $1.25 million redeemable note issued to Clime with an 8 per cent per annum interest rate paid monthly. This note is redeemable in 12 months, with one 12-month extension by mutual consent.
Speaking to Money Management, managing director Michael Baragwanath said: “This is just a portion of our clients but we will look to place other clients with advisers that we think are a good fit and there are no planned redundancies. Clime will continue to provide retail advice in circumstances where wholesale clients require it (eg SMSF advice to members regarding their superannuation or pension) or for family members of our private clients.”
He added the firm’s activity on social media often generated interest from retail investors who were unsuited to the Clime IM model so it was looking to identify practices who live close to those clients so it could refer them.
Clime IM said the divestment of this client book was consistent with the company’s strategy to streamline operations and prioritise wholesale business.
“Our core strength remains in serving high-net-worth investors and private clients, providing access to differentiated strategies, investments and structures that are not easily available through mass-market channels. We will continue to review our products and services and focus on areas where we can demonstrate value – lower-value offerings will be rationalised appropriately in line with this approach.”
This is one of several moves the firm has made as part of an ongoing cost-out process led by Baragwanath since his appointment to the investment firm in July 2024.
Last year, the firm disposed of advice licensee Madison to Infocus in a $2 million sale, having acquired the firm back in June 2020 from OneVue. But Madison division, led by chief executive Annick Donat, reported a loss of $460,000 in FY24 and had added significantly to the cost of running the business. Cliime also stated that Madison posed further risk to the wider business without any real benefit to its internal advice division.
“In combination with the cost initiatives already enacted, the divestment of Madison positions the company for profit improvement in FY25. This strategic move enables Clime to concentrate on its core asset management and private wealth capability,” Clime said at the time.
It has also enacted a range of growth initiatives to boost the firm’s reach to both the wholesale and retail market, such as the operation of a managed discretionary account (MDA) service with Netwealth and Philo Capital Advisers and an agreement with NSW advisory and accountancy firm, Arcus Capital Advisory, to manage a bespoke wholesale investment offering.
In terms of M&A activity, it is understood Clime IM is considering its own acquisitions of smaller fund managers or small advice firms.
“Chaos creates opportunity and we need to be positioned for that,” Baragwanath told Money Management. “Lots of advisers want to work with a partner who has greater resources, they don’t want to feel they are on their own and with the weight of the world on their shoulders, so bigger groups then become appealing.
“When markets are good, people feel they can do it on their own but when issues strike, they realise they want to have a partner and those capabilities available to them.”
