Sanne Group PLC Acquisition of Luxembourg Investment Solutions (1694S)

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RNS Number : 1694S

Sanne Group PLC

29 September 2017

29 September 2017

Sanne Group plc

("SANNE" or "the Group")

Acquisition of Luxembourg Investment Solutions S.A. ("LIS") and Compliance Partners S.A. ("CP") ("Acquisition")

Signing of increase in Revolving Credit Facility ("RCF") taking total facilities to GBP90 million

SANNE, a leading provider of alternative asset and corporate administration services, is pleased to announce that it has entered into an agreement to acquire Luxembourg Investment Solutions S.A. and Compliance Partners S.A., (the "Acquired Companies").

Highlights

   -- Strengthens the Group's presence in Luxembourg, a globally significant market for Alternative Assets, to a 
      combined team of more than 100 people 
 
   -- Enhances SANNE's ability to provide a full service offering to its global institutional client base 
 
   -- LIS is a leading third party Alternative Investment Fund Manager (AIFM) with assets under administration in 
      excess of EUR8.3billion 
 
   -- LIS is authorised to deliver Management Company ("ManCo") services to both Alternative Investment Funds (AIFs) 
      and open ended mutual funds (UCITS) within the EU 
 
   -- CP provides primarily unregulated corporate services to its clients 
 
   -- Initial acquisition value payable of circa EUR55 million split approximately 36% in new SANNE shares and the 
      balance in cash. Additionally an earn-out payment is expected to be made in 2019, based on performance of the 
      Acquired Companies in the year ended 31 December 2018 
 
   -- The Acquisition is expected to be immediately earnings enhancing 
 
   -- Conditional upon certain regulatory clearances and is expected to complete in Q1 2018 
 
   -- Extension to the RCF signed with HSBC increasing total facilities to GBP90 million 

LIS is a leading third-party AIFM headquartered in Luxembourg with a branch in Dublin. Clients are spread across Private Equity, Real Estate, Private Debt and Infrastructure funds. LIS is regulated under the supervision of Commission de Surveillance du Secteur Financier (CSSF).

CP primarily provides unregulated services, including corporate services, for both LIS and external clients, enabling clients to have a physical presence in Luxembourg.

The Acquired Companies together employ more than 70 people. The principal managers and shareholders of the businesses, Dr Thomas Goergen, Pierre Weimerskirch and Daniel Kranz, (the "Managers") will remain with the Group post completion.

This transaction is consistent with SANNE's stated strategy to supplement strong organic growth with complementary acquisitions which enable the business to take advantage of a consolidating market and diversify its client base, geographic positioning and service offering. The Acquisition will provide SANNE with a leading platform in Luxembourg, a globally significant market, from which to broaden its services to existing alternatives clients and improve SANNE's competitive positioning in attracting new clients. The Acquisition follows SANNE's recently granted licence by the Central Bank of Ireland to provide services from its Dublin operation, further strengthening the Group's ability to provide integrated fund administration, depositary and AIFM services to its global alternatives clients. The Acquisition will also enable SANNE to leverage the Group's integrated technology platforms and expertise across its global footprint.

The consideration for the Acquisition is made up of an initial element and an earn-out element. The initial consideration payment is expected to be circa EUR55 million. This will be 64% payable in cash and 36% payable in SANNE shares. The earn-out payment is expected to be paid in 2019 and is based on the Acquired Companies' performance in the year ended 31 December 2018. The total consideration payable is subject to an absolute cap of

EUR100 million.

The share consideration payable as part of the initial consideration will be calculated with reference to SANNE's average five day weighted average closing share price up to 27 September 2017 of 765p. The Managers will be subject to a restricted sale agreement which locks-in their consideration shares for a maximum of four years. An equal element of their shares will become unlocked on each annual anniversary of this announcement. It is intended that the cash earn-out payment will be funded through the Group's operating cash flows and existing facilities.

The Acquired Companies have experienced significant growth in recent years, with combined EBITDA growing at an annual rate of 28% between 2014 and 2016. In the year ended 31 December 2016, LIS made EBITDA of EUR1.4 million and had gross assets of EUR2.4 million, whilst CP made EBITDA of EUR0.2 million and had gross assets of EUR0.4 million. The reported EBITDA includes non-underlying costs which will not be incurred by SANNE post completion. The Acquired Companies are expected to report a normalised EBITDA to 31 December 2017 of circa EUR4.2 million.

SANNE has today also entered into an agreement with HSBC to extend the Group's existing RCF from GBP14 million to GBP44 million, under the terms of the Group's debt facility. The extension of the facility will be used to fund the consideration for the Acquisition and for general corporate purposes.

Dean Godwin, Chief Executive Officer of Sanne Group plc, commented:

"The addition of LIS and CP into our existing Luxembourg operations is a significant development for us. The acquisition will add further quality and scale to our existing business whilst also deepening our alternative asset service offering with a market leading AIFM service in Luxembourg. LIS and CP are led by a highly experienced and respected team that has established a platform with a focus on providing its clients with the highest quality services. This closely aligns with our own philosophy. Luxembourg is an important jurisdiction for us as we continue to work with, and service, international alternative asset managers launching funds in Europe."

Dr Thomas Goergen, Founding Managing Partner at LIS commented:

"We are very excited to be joining SANNE. Being part of a global business will enable us to access an extensive range of complementary services from across the Group. These will naturally add value to our clients going forward and will help us to continue to meet the ever increasing global service requirements from them."

Enquiries:

 
 Sanne Group plc 
  Dean Godwin, Chief Executive 
  Officer 
  Spencer Daley, Chief Financial 
  Officer                           [phone] 
 Investec Bank plc 
  Garry Levin / James Ireland 
  Ed Thomas / Matt Lewis            [phone] 
 Tulchan Communications LLP 
  Tom Murray                        [phone] 
 

Notes:

SANNE provides administration, reporting and fiduciary services to leading alternative asset managers, financial institutions, family offices and corporates. The Group employs more than 1,200 people worldwide and administers structures and funds that have in excess of GBP200 billion of assets.

The Group has a presence in 15 established strategic locations spread across the Americas, EMEA and Asia-Pacific.

This announcement contains inside information.

SANNE is listed on the Main Market of the London Stock Exchange.

sannegroupplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

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September 29, 2017 02:01 ET (06:01 GMT)