TIDMAFM
RNS Number : 3479Z
Alpha Fin Markets Consulting plc
20 May 2021
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES
AT THE OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
20 May 2021
Alpha Financial Markets Consulting plc
Acquisition of Lionpoint Holdings, Inc.
Introduction
Alpha Financial Markets Consulting plc (AIM: AFM) ("Alpha FMC",
the "Company" or, together with its subsidiary undertakings, the
"Group"), a leading global provider of specialist consultancy
services to the Asset Management, Wealth Management and Insurance
industries, announces that it has today entered into an agreement
to acquire the entire issued share capital of Lionpoint Holdings,
Inc. ("Lionpoint"), a US-based provider of specialist consultancy
services to the Alternative Investment industry, on a cash free,
debt free basis for a total amount (payable over four years) of up
to US$90 million (GBP63.8 million) in a combination of cash and new
Alpha FMC shares (the "Acquisition").
The maximum total cash payable by Alpha FMC under the
Acquisition is US$73.6 million (GBP52.2 million), which will be
funded from the Group's existing cash reserves and the proceeds of
a placing of new ordinary shares in the Company, representing up to
9.0 per cent. of Alpha FMC's issued share capital to raise up to
approximately GBP31 million (before expenses) (the "Placing"). Of
this cash amount, US$34.5 million (GBP24.5 million) becomes payable
on completion of the Acquisition. The Placing is being conducted
through an accelerated bookbuilding process which will be launched
immediately following the release of the Placing Announcement. Joh.
Berenberg, Gossler & Co. KG ("Berenberg") and Investec (as
defined below) are acting as the Company's joint bookrunners
(Berenberg and Investec together, the "Joint Bookrunners") in
connection with the Placing.
Acquisition highlights
-- Acquisition of a leading US-based provider of strategy,
technology and operations consultancy services to the Alternative
Investment industry.
-- Strong strategic rationale in line with Alpha FMC's stated
growth strategy, with the Acquisition significantly increasing both
the Group's exposure to the attractive and fast growing Alternative
Investment market and its footprint in the large and strategically
important North American market.
-- Highly complementary service offering and blue chip client
base, broadening the Group's capabilities in the rapidly growing
Alternative Investment client segment and providing an attractive
opportunity to expand the range of services provided to the
combined client base.
-- Strengthens the Group's technology-focused consulting service
proposition, bringing a number of additional key vendor
partnerships.
-- Lionpoint has a strong track record of revenue and EBITDA growth at attractive margins.
-- Strong alignment with Alpha FMC's culture, with Lionpoint's
existing management team committed to remaining with the business
underpinned by the structure of the transaction.
The Acquisition is expected to be significantly accretive to the
Company's earnings in first financial year of ownership, and is
expected to generate returns ahead of the Group's cost of capital
at attractive margins.
Information on Lionpoint
Founded in 2014, Lionpoint is a leading US-based provider of
strategy, technology and operations consultancy services to the
Alternative Investment industry. The business is headquartered in
New York, with six offices across New York, Denver, San Francisco,
London, Geneva and Sydney and over 100 consultants from industry,
operations and technology backgrounds.
Lionpoint's core consulting services include strategic advisory
services; operating model review and design; technology roadmap
development; system selection, implementation and integration; data
modelling and analytics; and project management. It has extensive
experience transforming the front to back office operations of
global alternative investment managers, advisors and investors. The
business has a blue chip client base with over 125 clients across
private equity, real estate and infrastructure managers, private
debt and credit funds, limited partners, financial services firms
and portfolio companies.
Lionpoint is a certified implementation partner for over 20
specialist key technologies and was awarded Europe's Best
Technology Advisory Firm for 2021 by Private Equity Wire.
Lionpoint has an impressive track record of growth, delivering
strong double digit revenue growth in the last two years, and
average underlying EBITDA margins of 20.3 per cent. In the year
ended 31 December 2020, Lionpoint reported (unaudited) revenue of
US$30.1 million (GBP23.5 million) and adjusted EBITDA of US$6.9
million (GBP5.4 million). Lionpoint also benefits from strong cash
flow generation. As at 31 December 2020,
Lionpoint had net assets of US$5.5 million (GBP4.0 million).
Strategic rationale for the Acquisition
Alpha FMC's strategic objective is to be recognised as the
leading global consultancy to the Asset Management, Wealth
Management and Insurance industries and specifically to double the
business over the next four years through a focus on geographic
expansion (particularly in North America), broadening the Group's
service offering including into new vertical markets and expanding
the Group's product and technology offerings. As previously
indicated, the Group intends to execute this strategy, in part,
through inorganic growth, recognising the benefits of increasing
the breadth of the service offering and geographic coverage through
selective, complementary acquisitions.
With this clear and focused strategy, Lionpoint represents a
highly attractive acquisition for the Group and one which meets the
Group's key strategic M&A criteria. Lionpoint's focus is on the
Alternative Investment industry, which is one of the fastest
growing segments in asset management and it provides Alpha FMC with
a market-leading capability to service this rapidly growing market
in both North America and internationally. It also significantly
increases the Group's footprint and service offering in the large
and strategically important North American market which is subject
to the same long term structural growth drivers of increasing
assets under management, regulation and cost pressure.
Lionpoint's blue chip Alternatives-focused client base is highly
complementary to Alpha FMC's existing client base, with limited
overlap. Accordingly, the Company expects that there will be
opportunities to leverage the combined capabilities of both parties
into the newly expanded client base. The Acquisition will also
strengthen the Group's technology-focused consulting service
proposition, bringing a number of additional key vendor
partnerships to Alpha FMC and enhancing the Group's capabilities in
this important area.
The Acquisition will also bring a highly experienced,
entrepreneurial management team and add further management
expertise and capability to the Group. The existing Lionpoint
founders and management team, including Nick Moore and Jonathan
Balkin (the "Founders"), will remain with the business going
forward. More broadly, Lionpoint's high performance culture is
closely aligned with Alpha FMC's, with managers and consultants
strongly incentivised to identify and introduce new opportunities
and to deliver high levels of client service.
Terms of the Acquisition
Lionpoint is majority owned by the Founders, with a minority
investment held by Blackstone. The Acquisition has been structured
to retain and incentivise the Lionpoint management team to deliver
its growth strategy, with a management incentive plan being put in
place on completion of the Acquisition for the wider Lionpoint
management team.
The maximum cash and share amount payable by Alpha FMC under the
terms of the Acquisition is US$90 million (GBP63.8 million),
comprising a base amount of US$54.8 million (GBP38.9 million) and
an earnout payable of up to US$35.2 million (GBP25.0 million),
including payments pursuant to the management incentive plan.
Of these amounts, US$34.5 million (GBP24.5 million) becomes
payable in cash on completion of the Acquisition ("Completion"),
US$10.8 million (GBP7.7 million) becomes payable on the first
anniversary of Completion, US$8.4 million (GBP6.0 million) becomes
payable on the second anniversary of Completion and US$1.1 million
(GBP0.8 million) becomes payable across the third and fourth
anniversaries of Completion. 70 per cent. of the amount payable on
the first and second anniversaries of completion will be paid in
cash, with the balance in new ordinary shares in the capital of
Alpha FMC ("Ordinary Shares"). The Ordinary Shares being issued
under the terms of the Acquisition will be subject to customary
lock ups for a period of up to three years following issue.
The earnout payments of up to US$35.2 million (GBP25.0 million)
become payable in three broadly equal tranches in August 2022,
August 2023 and August 2024 respectively, with 70 per cent. payable
in cash and 30 per cent. in Ordinary Shares. Receipt of the earn
out payments is subject to Lionpoint achieving escalating gross
profit targets over the three year period. The earnout targets have
been set at challenging levels and, to achieve the full earnout,
Lionpoint would need to make a significant contribution to the
Group's EBITDA over a three year period.
The maximum potential cash payable by Alpha FMC pursuant to the
Acquisition, assuming full payment of the earnout, would be US$73.6
million (GBP52.2 million).
The Acquisition is unconditional and Completion will occur
today.
The terms and conditions of the Placing will be set out in a
further announcement immediately following the publication of this
announcement. Berenberg and Investec are acting as Joint
Bookrunners in connection with the Placing.
Financial effects of the Acquisition
The Company expects the Acquisition to be significantly
accretive to earnings in first financial year of ownership and the
Acquisition is expected to generate returns ahead of the Group's
cost of capital at comparable margins to the Group. This statement
is not meant or intended to be a profit forecast and should not be
interpreted to mean that the earnings per share of Alpha FMC
following completion of the Acquisition will necessarily be above
or below the historical published earnings per share.
Commenting on the Acquisition, Euan Fraser, Alpha FMC's CEO,
said:
"We are delighted with the acquisition of Lionpoint, which is a
fantastic addition to our Group and aligns strongly with Alpha
FMC's stated strategy of growing our capabilities in the
rapidly-growing Alternatives Investment space and our footprint in
North America. Lionpoint brings a complementary, blue chip client
base, a focus on leading technology solutions and key vendor
partnerships, and a strong global management team aligned with
Alpha FMC's own culture. The transaction is a significant step on
our journey to doubling the business in four years, and we look
forward to working with Lionpoint and growing our businesses
together."
Commenting on the Acquisition, Nick Moore, Lionpoint's
Co-Founder, said:
"On behalf of Lionpoint, Founders Nick Moore and Jonathan Balkin
are delighted to be joining Alpha FMC and see this is an attractive
and strategic next step in Lionpoint's development as an expanding
global business. Our alternatives focus and position as a leading
global consultancy in this space is highly complementary to Alpha
FMC and as a management team we are excited to become part of such
an innovative firm and one that shares our culture and values.
"
Notes:
1. All acquisition terms are expressed in GBP calculated using
the closing GBP/USD rate of 1.41 on 19/05/2021
2. Lionpoint's FY 2020 revenue and adjusted EBITDA are expressed
in GBP calculated using the average GBP/USD rate of 1.28 for
calendar year 2020.
3. Lionpoint's net assets as at 31/12/2020 are expressed in GBP
calculated using the closing GBP/USD rate of 1.37 on 31/12/2020
Enquiries:
+44 (0)20 7796
Alpha Financial Markets Consulting plc 9300
Euan Fraser (Global Chief Executive Officer)
John Paton (Chief Financial Officer)
Investec Bank plc - Nominated Adviser, Joint +44 (0)20 7597
Bookrunner and Joint Corporate Broker 4000
Patrick Robb
James Rudd
Harry Hargreaves
Berenberg - Joint Bookrunner and Joint Corporate +44 (0)20 3207
Broker 7800
Chris Bowman
Toby Flaux
Alix Mecklenburg-Solodkoff
+44 (0)20 3757
Camarco - Financial PR 4980
Ed Gascoigne-Pees
Candice Adam
About Alpha FMC
Alpha FMC is a leading global provider of specialist consultancy
services to the Asset Management, Wealth Management and Insurance
industries. With over 430 consultants across twelve offices
spanning the UK, Europe, North America and Asia, Alpha FMC has the
largest dedicated team in the industry. Alpha FMC has provided
consultancy services to over 400 clients, including 85 per cent. of
the 20 largest global asset managers by AUM and a range of other
buy-side firms.
This announcement should be read in its entirety. In particular,
you should read and understand the information provided in the
"Important Notices" section of this announcement.
IMPORTANT NOTICES
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE
UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION
OR DISTRIBUTION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF
AMERICA. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE
OR SUBSCRIPTION INTO THE UNITED STATES. THE SECURITIES REFERRED TO
HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES,
EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION. NO
PUBLIC OFFERING IS BEING MADE IN THE UNITED STATES.
This announcement may contain, or may be deemed to contain,
"forward-looking statements" with respect to certain of the
Company's plans and its current goals and expectations relating to
its future financial condition, performance, strategic initiatives,
objectives and results. Forward-looking statements sometimes use
words such as "aim", "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "seek", "may", "could",
"outlook" or other words of similar meaning. By their nature, all
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances which are beyond the
control of the Company, including amongst other things, United
Kingdom domestic and global economic business conditions,
market-related risks such as fluctuations in interest rates and
exchange rates, the policies and actions of governmental and
regulatory authorities, the effect of competition, inflation,
deflation, the timing effect and other uncertainties of future
acquisitions or combinations within relevant industries, the effect
of tax and other legislation and other regulations in the
jurisdictions in which the Company and its affiliates operate, the
effect of volatility in the equity, capital and credit markets on
the Company's profitability and ability to access capital and
credit, a decline in the Company's credit ratings; the effect of
operational risks; and the loss of key personnel. As a result, the
actual future financial condition, performance and results of the
Company may differ materially from the plans, goals and
expectations set forth in any forward-looking statements. Any
forward-looking statements made in this announcement by or on
behalf of the Company speak only as of the date they are made.
Except as required by applicable law or regulation, the Company
expressly disclaims any obligation or undertaking to publish any
updates or revisions to any forward-looking statements contained in
this announcement to reflect any changes in the Company's
expectations with regard thereto or any changes in events,
conditions or circumstances on which any such statement is
based.
Berenberg, which is authorised and regulated by the German
Federal Financial Supervisory Authority and subject to limited
regulation in the United Kingdom by the Financial Conduct Authority
(the "FCA"), is acting exclusively for the Company in connection
with the Placing and will not be acting for any other person and
will not be responsible to any person other than the Company for
providing the protections afforded to clients of Berenberg or for
advising any other person in respect of the matters referred to in
this announcement.
Investec Bank plc ("Investec Bank") is authorised by the
Prudential Regulation Authority (the "PRA") and regulated in the
United Kingdom by the FCA and the PRA. Investec Europe Limited
(trading as Investec Europe) ("Investec Europe"), acting as agent
on behalf of Investec Bank in certain jurisdictions in the European
Economic Area (together Investec Bank and Investec Europe
hereinafter referred to as "Investec"), is regulated in Ireland by
the Central Bank of Ireland. Investec is acting exclusively for the
Company and no one else in connection with the Placing, and
Investec will not be responsible to anyone other than the Company
for providing the protections afforded to its clients or for
providing advice in relation to the Placing or any other matters
referred to in this announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Investec or Berenberg or by any of their
respective affiliates, agents, directors, officers, consultants,
partners or employees as to, or in relation to, the accuracy or
completeness of this announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
No statement in this announcement is intended to be a profit
forecast or estimate, and no statement in this announcement should
be interpreted to mean that earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
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accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
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