Euroz Hartleys sells capital markets arm to Canada's BMO

Euroz Hartleys has sold its capital markets business to Canada's BMO Financial Group (BMO) for $145 million in an all-cash deal.

The divestment will allow the ASX-listed wealth firm to be a standalone pure-play private wealth business, it said.

Both Euroz Hartleys executive chair Andrew McKenzie and managing director Tim Bunney will transition to the capital markets business under BMO following the transaction which is expected to complete by the end of the year.

It has started an internal and external search for a new chief executive and noted the board as well as the chair role will evolve over time to reflect more private wealth representation.

Euroz Hartleys established an independent board committee of only independent and non-executive directors to assess conflicts of interest as two of the company's directors, McKenzie and Bunney, were expected to join BMO following completion of the deal. They, however, did lead the negotiations.

McKenzie and Bunney will continue to serve as non-executive directors for the short to medium term to ensure continuity.

Euroz Hartleys and BMO will also enter a strategic alliance which will preserve the longstanding and interconnected relation between the capital market and private wealth businesses.

McKenzie said the deep connectivity between the two businesses has always been a major strength and point of difference in its client offerings.

"We are confident that BMO is the best possible long-term partner for our capital markets business and will add value to the quality of our private wealth client offering," McKenzie said.

It intends to distribute the post tax net proceeds from the sale to shareholders through a fully franked dividend and capital return.

The capital market arm is focused on metals and mining equity capital markets, M&A and advisory firm. The institutional dealing team provides advice, idea generation, site visits and roadshows focused on resources, mining services and small- to mid-cap Western Australia industrials.

The strategic alliance will preserve access to the capital market capabilities, research, deal flow and primary market opportunities for its private wealth clients, Euroz Hartleys said.

The agreement will have an initial term of four years, with the option to renew for successive two-year terms by mutual agreement.

Euroz Hartleys will retain its trading, clearing and settlement function and will provide these services to capital markets business under BMO in a separate agreement.

It will continue to pay for the costs associated with these services and also contribute additional capital to support liquidity and regulatory capital requirements.

Additionally, under a separate agreement, it will provide transitional services to the capital markets business with an expected term of six to 12 months, which can be terminated early or extended as agreed. BMO will pay for the costs associated with the services.

BMO said the transaction will scale its local presence and combine its metals and mining franchise with Australia's premier equity distribution platforms and will create a fully integrated global capability.

"This is a defining step forward in strengthening our position as the leading metals and mining investment bank globally," BMO Capital Markets global head of investment and corporate banking Carrie Cook said.

"By combining our global distribution capabilities with deep local expertise in Australia, we are building a more connected platform that will enable clients to access capital and opportunities across markets."

McKenzie said the combination will bring together two highly complementary businesses to create a stronger and more competitive global platform.

"BMO provides immediate access to the leading global franchise in metals and mining and significantly expands our ability to connect Australian clients with international capital. We are excited to be part of a team that is setting the standard for the sector globally," he said.