HSQ Investment moves to take full control of Kingswood Holdings amid delisting plans

HSQ Investment Limited has made a decisive move to acquire full ownership of Kingswood Holdings Limited, launching an unconditional cash offer for the remaining shares it does not already own. Shareholders are being offered 7 pence per share, valuing the company at approximately £48.03 million. This follows HSQ’s recent acquisition of KPI’s stake in Kingswood, which increased its control to 89.39% of the company’s issued share capital.

The announcement comes as Kingswood prepares to delist from the AIM market, a decision that will have a profound impact on remaining shareholders. With the deadline approaching, investors must weigh the potential risks and opportunities of the offer before their ability to trade the stock disappears.

Why Is Kingswood Holdings Being Delisted?

Kingswood Holdings, a diversified wealth and investment management firm, has been navigating financial headwinds despite substantial revenue growth. Since listing on AIM in 2014, the company has pursued an aggressive acquisition-driven expansion strategy, significantly increasing its assets under advice and management (AUA&M). By December 2024, AUA&M had risen to £13.1 billion, supported by funding from Pollen Street Capital and additional financing from HSQ Investment Limited.

Despite this expansion, Kingswood has struggled with rising debt. By the end of 2024, the company had accumulated £91.6 million in gross debt, including senior debt, outstanding leases, and loans from HSQ. These financial challenges, coupled with sector-wide market pressures, made it increasingly difficult for Kingswood to sustain its growth under public market conditions.

As a result, HSQ Investment has positioned itself as the only viable financial backer, providing an additional £21 million in 2024 alone to cover Kingswood’s obligations. HSQ has made it clear that any future support will be conditional on Kingswood becoming a private company, prompting the decision to delist from AIM.

How Has Kingswood’s Stock Performed Ahead of the Buyout?

Leading up to the unconditional cash offer, Kingswood share price experienced considerable volatility. As of March 18, 2025, Kingswood’s stock was trading at 7.15 pence per share, a 2.14% increase from the previous day’s close of 7.00 pence. However, this remains 48.93% below its 52-week high of 14.00 pence, recorded in June 2024.

The decline reflects investor concerns over liquidity constraints, rising debt, and uncertain future valuations. While some see HSQ Investment Limited’s takeover as a necessary move, others worry that delisting will limit their ability to sell shares in the future.

What Are the Terms of the Unconditional Cash Offer?

HSQ’s unconditional cash offer provides shareholders with a 7p per share payout, ensuring an immediate liquidity event before Kingswood transitions to private ownership. The offer document will be distributed within 28 days of the March 18 announcement, and trading of Kingswood shares is expected to cease on April 17, 2025.

Under UK takeover rules, if HSQ secures 90% ownership, it has the right to compulsorily acquire the remaining shares. Given that HSQ already controls 89.39% of Kingswood’s issued share capital, reaching this threshold is highly likely.

For shareholders who do not accept the offer, the delisting from AIM will make future trading extremely difficult, as there will no longer be a public market for the shares. Investors who retain their holdings risk holding illiquid stock in a privately owned entity, with no guarantee of future buyout opportunities.

What Are HSQ Investment’s Plans for Kingswood Post-Takeover?

HSQ Investment Limited has signaled its intention to sell Kingswood’s UK and Ireland operations, potentially merging them with another Pollen Street Capital portfolio company. No formal offers have been announced, but HSQ’s restructuring plan aims to ensure long-term financial stability for Kingswood’s core businesses.

Kingswood’s U.S. division, Kingswood US, LLC, is expected to continue operating independently, with HSQ focusing on organic growth strategies in that market. However, restructuring could impact Kingswood’s central corporate functions, leading to job reductions or operational shifts if UK and Ireland operations are divested.

For employees, HSQ has stated that there are no immediate changes planned for pension contributions or employee contracts. However, future business transitions could lead to adjustments in corporate structure and workforce planning.

Should Kingswood Shareholders Sell, Hold, or Buy?

With delisting approaching and full privatization likely, investors must carefully consider their options.

Selling could be the best option for shareholders who prioritize liquidity and certainty, as accepting the 7p per share offer ensures an exit before the stock loses tradability. Holding the shares could be an alternative for those willing to take on higher risk and wait for potential post-privatization asset sales, though uncertainty remains regarding future valuations. Buying is unlikely to be a viable strategy, as HSQ Investment Limited already controls nearly 90% of Kingswood shares, leaving little incentive for new investors to enter.

What Happens If Shareholders Reject the Offer?

If Kingswood shareholders do not accept the offer, they will retain shares in an unlisted company, which may become extremely difficult to trade. Unlike public companies, private entities do not offer transparent pricing or regular liquidity events, meaning investors may have to wait indefinitely for an alternative exit strategy.

HSQ’s buyout effectively removes Kingswood from the stock market, and without an alternative buyer, remaining investors will have limited control over future transactions. Analysts caution that unless a secondary buyout or alternative liquidity event emerges, post-delistment shareholders may be locked into an uncertain investment.

What Should Kingswood Investors Do Now?

With HSQ Investment Limited’s buyout nearing completion, shareholders have a critical decision to make. The unconditional cash offer represents a final opportunity to exit with liquidity, as Kingswood’s delisting from AIM will severely limit trading options.

While some investors may hope for long-term value in a privatized Kingswood, the company’s significant debt burden and restructuring plans introduce substantial risks. For those who prefer certainty and immediate cash realization, the 7p per share payout may be the most practical course of action.

Given the complexity of the situation, shareholders should carefully evaluate their positions and seek independent financial advice if unsure about their next steps. With the final trading days on AIM counting down, the window to act is closing fast.