TIDMFSG
RNS Number : 1435S
Foresight Group Holdings Limited
12 July 2022
LEI: 213800NNT42FFIZB1T09
12 July 2022
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DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. FOR IMMEDIATE
RELEASE
Foresight Group Holdings Limited ("Foresight", "Foresight
Group", the "Group") acquires Infrastructure Capital Holdings Pty
Ltd ("Infrastructure Capital Group", "Infrastructure Capital", the
"Company") for up to A$140 million (GBP79.6 million)
Summary
-- Acquisition of Infrastructure Capital, a leading Australian specialist
infrastructure manager with GBP2.8 billion of Assets under Management
(AUM) and GBP1.8 billion of Funds under Management (FUM) as at
31 March 2022
-- Delivers scale in the large and growing Australian infrastructure
and renewables market
-- Combined group will be one of the leading independent renewable
generation and infrastructure investors in Australia and will
benefit from enhanced product and distribution capabilities
-- Strong business complementarity and cultural alignment will enable
a seamless integration process and ensure an immediate focus on
growth opportunities
-- Up-front consideration of A$105 million (GBP59.7 million) for
100% of Infrastructure Capital to be paid 50% in cash and 50%
in newly issued Foresight shares, with cash component funded by
existing financial resources
-- Contingent consideration of up to A$35 million (GBP19.9 million)
and management performance entitlement of up to A$25 million (GBP14.2
million) will become payable in cash and Foresight shares on the
achievement by Infrastructure Capital of certain performance targets
by 30 June 2026
-- Transaction structure provides strong alignment between Infrastructure
Capital shareholders, existing management and Foresight Group
-- Expected to deliver c.10% EPS accretion in the first full year
post acquisition, with further value expected to be delivered
through synergies over time
-- Beneficial to all stakeholders, including Foresight and Infrastructure
Capital management, staff and clients
Foresight Group, a leading infrastructure and private equity
manager, is pleased to announce the proposed acquisition (the
"Acquisition") of Infrastructure Capital, an established,
specialist infrastructure manager in the Australian market.
Infrastructure Capital is currently owned by Log Creek (63.3%),
other non-management shareholders (3.8%) and management
(32.9%).
Infrastructure Capital Group
Infrastructure Capital offers investment management and asset
management products and services to an established client base of
Australian and international institutional investors. Since
inception, Infrastructure Capital has deployed capital across 13
realised and 21 unrealised investments. Infrastructure Capital
offers investors access to portfolios that are diversified by
sector, counterparty and risk profile, managing three flagship
funds all of which have a proven performance track record. The
Company has 44% of its AUM invested in renewable energy and is one
of Australia's largest private renewable generators, with over
787MW of renewable energy generation capacity and more broadly is
seeing a clear sustainability overlay in its core sectors.
Infrastructure Capital recently established an integrated asset
management business providing a range of services to portfolio
companies, highlighting the Company's holistic and active approach
to investment management. Infrastructure Capital's senior
management team is comprised of highly experienced infrastructure
specialists with an average of over 20 years' experience and
complementary skillsets across fund management, principal investing
and operations management. The Company has offices in Sydney and
Melbourne, with 57 FTEs of which 28 are part of the asset
management business.
c.93% of Infrastructure Capital's revenues in the 12-month
period ending 31 March 2022 were recurring. In the same period, the
Company generated GBP7.2 million of EBITDA. Infrastructure
Capital's EBITDA margin is in line with Foresight's medium-term
target.
Acquisition rationale
The Acquisition, which has the unanimous support of the
Foresight Board, will deliver a meaningful contribution to
Foresight's growth, increasing AUM by GBP2.8 billion (up 30% on 30
June 2022 unaudited AUM of c.GBP9.4 billion). It enables Foresight
to strengthen its presence in the attractive Australian
infrastructure and renewables market and to diversify its revenue
profile, increasingly positioning the Group internationally.
Combining Infrastructure Capital 's strong market position in
Australia with Foresight's strengths as an international
sustainability-led alternative asset manager provides significant
growth potential for both organisations. The combined group will be
one of the largest renewable generation and infrastructure
investors in Australia and will benefit from a stronger business
profile and broader investor reach. The Acquisition will also
enhance Infrastructure Capital 's and Foresight's investment,
product development and institutional distribution capabilities and
facilitate the introduction of new products in both new sectors and
new geographies, providing clients access to a wider suite of
products and services.
The Acquisition also creates a pathway for Foresight to address
Asian markets which represent a compelling opportunity for real
asset investors, especially in the energy infrastructure sector
where the combined group is better positioned to successfully raise
and deploy capital over time.
The strong business complementarity and cultural alignment
between Foresight and Infrastructure Capital is expected to
facilitate a seamless integration process, providing continuity of
existing client services and relationship dynamics and enabling an
immediate focus on growth opportunities. The Infrastructure Capital
management team will continue to manage the business and operate on
a largely stand-alone basis day-to-day, with appropriate oversight
and support from the Group. Foresight's existing 7-strong team in
Australia will be integrated into Infrastructure Capital
post-completion.
The Board expects:
-- c.10% EPS accretion in the first full year post Acquisition;
-- Additional value being unlocked through synergies over time; and
Surplus over Foresight's liquidity requirements to be maintained
-- following the Acquisition.
Acquisition terms
Foresight will pay an up-front consideration of c.A$105 million
(GBP59.7 million), equating to a multiple of forecast EBITDA for
the year ending 30 September 2022 of c.8x, payable 50% in cash and
50% in Foresight shares. c.7.94m Foresight shares will be issued(1)
as part of the up-front consideration, resulting in ownership in
the Group of c.6.8% for Infrastructure Capital 's shareholders
including the existing senior executive management. These shares
will (subject to certain customary good leaver exceptions) be
subject to forfeiture if a seller ceases to be employed or
contracted by Infrastructure Capital during the next 3 years, with
100% of a seller's Foresight shares being forfeited if this occurs
prior to 30 September 2023, 66.66% from 30 September 2023 to 29
September 2024 and 33.33% from 30 September 2024 to 30 September
2025. The cash component will be funded by the Group's existing
financial resources.
The Acquisition is being completed on a debt free, cash free
basis and thus Infrastructure Capital's surplus cash is expected to
be paid out prior to completion and there will be a customary
completion adjustment at closing. Under the terms of the
Acquisition, certain performance fees have been carved out and left
with Infrastructure Capital's shareholders for a 3-year period.
Infrastructure Capital's shareholders will be also entitled to a
contingent consideration of up to A$35 million, of which up to
A$30m is payable in cash and Foresight shares, based on the
achievement of management fee revenue targets for the 12-month
period ending 30 June 2025. The shares relating to this contingent
consideration will vest over the two years following this period.
The additional contingent consideration of up to A$5m is payable in
cash and based on a revenue share mechanism for incremental asset
management revenues over the period from closing to 30 June
2026.
In addition to the consideration paid to Infrastructure
Capital's shareholders, Infrastructure Capital's management team
and key employees will receive a performance entitlement of up to
A$25 million, payable in cash and share rights and based on the
achievement of management fee revenue targets for the 12-month
period ending 30 June 2026. The share rights relating to the
performance entitlement will vest over the following year.
The Acquisition is a Class 2 transaction under the UK Listing
Rules and is anticipated to complete over the next three months,
subject to regulatory approval from the Foreign Investment Review
Board in Australia and satisfaction of certain change of control
conditions. Infrastructure Capital generated a pre-tax profit of
A$10.5 million (GBP6.0 million) in the year ended 30 September
2021. The Company had A$9.4 million (GBP5.4 million) of gross
assets at that date.
Foresight is being advised by Lazard (Financial Adviser),
Travers Smith (Legal Adviser), Allens (Legal Adviser), PWC
(Financial), Marsh (Insurance) and Numis (Sponsor) in relation to
the transaction.
This transaction follows Foresight's recent acquisition of the
technology ventures division of Downing LLP and provides further
evidence of the Group delivering inorganic growth consistent with
its stated targets; to grow AUM by 20-25% per annum over the medium
term, to maintain the contribution from recurring revenues within
the 85-90% range, and to grow core EBITDA margin to 43% over the
medium term.
Bernard Fairman, Executive Chairman of Foresight Group Holdings
Limited, commented:
"Acquiring Infrastructure Capital is a transformational deal for
Foresight and well-aligned with our ambitious growth plans. We have
be en in Australia since 2015 and know that Infrastructure Capital,
with its significant infrastructure presence and strong
institutional client base, is a highly complementary fit for the
Group.
"This is a financially and strategically accretive acquisition
which will add approximately GBP3 billion of AUM and result in
double-digit EPS accretion, whilst also delivering geographic
diversification and enhanced distribution channels for our existing
funds. There is a strong cultural alignment between the Foresight
team and our new Infrastructure Capital colleagues and we are very
much looking forward to working alongside them to benefit from the
many exciting growth opportunities that the combined group will
generate."
Mike Fitzpatrick, majority shareholder of Infrastructure
Capital, commented:
"I am excited by this transaction because of its obvious
benefits to investors in our funds. As part of the combined group,
Infrastructure Capital will offer a wider range of products
developed from a deeper talent pool, responding to the
consolidation in the institutional market. Both firms have a long
and deep commitment to renewables, which will continue to be a
focus. Interestingly, management of each firm sees the world in
much the same way, and integration will not be a challenge.
Infrastructure Capital is in a strong position, with over A$3
billion of FUM, and one of the best positioned renewables funds in
the Australian market in ARIF, which has wind, solar and hydro
assets, and is trialling hydrogen power storage to add value to
those assets. I am looking forward to becoming a shareholder in
Foresight as part of this transaction."
Tom Laidlaw, Chief Executive Officer of Infrastructure Capital,
commented:
"We are delighted to be joining Foresight Group. The bringing
together of two respected and highly regarded infrastructure
managers will be beneficial to all our stakeholders. We will
continue to manage the business as usual with the added benefit of
having access to Foresight's expertise, global footprint and
product offerings."
Notes:
1. Calculated based on volume weighted average price over the 30
trading days ending on 11 July 2022.
All values converted from AUD to GBP at an exchange rate of
0.5687.
Analyst presentation:
A pre-recorded presentation will be available to view on the
Company's website ( https://www.fsg-investors.com ) on 12 July
2022.
This presentation will be played at the start of a webcast from
9.00 a.m. (UK time) on 12 July 2022, and be followed by live
Q&A for analysts hosted by Bernard Fairman (Executive
Chairman), Gary Fraser (CFO and COO) and Nigel Aitchison (Co-Head
of Infrastructure).
Those wishing to join should register via the following
link:
Register here
For further information please contact:
Foresight Group Investors Citigate Dewe Rogerson
Liz Scorer Caroline Merrell / Toby Moore
+44 (0) 7852 210329 / +44 (0) 7768
981763
+44 (0) 7966 966956 caroline.merrell@citigatedewerogerson.com
ir@foresightgroup.eu /
toby.moore@citigatedewerogerson.com
About Foresight Group Holdings Limited
Foresight Group was founded in 1984 and is a leading listed
infrastructure and private equity investment manager. With a
long-established focus on ESG and sustainability-led strategies, it
aims to provide attractive returns to its institutional and private
investors from hard-to-access private markets. Foresight manages
over 330 infrastructure assets with a focus on solar and onshore
wind assets, bioenergy and waste, as well as renewable energy
enabling projects, energy efficiency management solutions, social
and core infrastructure projects and sustainable forestry assets.
Its private equity team manages ten regionally focused investment
funds across the UK and an SME impact fund supporting Irish SMEs.
This team reviews over 2,200 business plans each year and currently
supports more than 200 investments in SMEs. Foresight Capital
Management manages four strategies across six investment vehicles
with an AUM of over GBP1.6 billion.
Foresight operates from 12 offices across six countries in
Europe and Australia with AUM of c.GBP9.4 billion as at 30 June
2022 [1] . Foresight Group Holdings Limited listed on the Main
Market of the London Stock Exchange in February 2021.
https://www.fsg-investors.com/
Disclaimer - Forward-looking statements
This statement, prepared by Foresight Group Holdings Limited
(the "Company"), may contain forward-looking statements about the
Company and its subsidiaries (the "Group"). Such forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "projects",
"estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
various or comparable terminology. Forward-looking statements
involve known and unknown risks, uncertainties, assumptions and
other factors which are beyond the Company's control and are based
on the Company's beliefs and expectations about future events as of
the date the statements are made. If the assumptions on which the
Group bases its forward-looking statements change, actual results
may differ from those expressed in such statements. There are a
number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements, including those set out under
"Principal Risks" in the Company's annual report for the financial
year ended 31 March 2021. The annual report can be found on the
Company's website ( www.fsg-investors.com ). Forward-looking
statements speak only as of the date they are made. Except as
required by applicable law and regulation, the Company undertakes
no obligation to update these forward-looking statements. Nothing
in this statement should be construed as a profit forecast.
Lazard & Co., Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting
exclusively as financial adviser to Foresight and no one else in
connection with the Acquisition and will not be responsible to
anyone other than the Foresight for providing the protections
afforded to clients of Lazard & Co., Limited nor for providing
advice in relation to the Acquisition or any other matters referred
to in this announcement. Neither Lazard & Co., Limited nor any
of its affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of Lazard & Co., Limited in connection with this
announcement, any statement contained herein or otherwise.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively as sponsor for Foresight and for no-one else
in connection with the contents of this announcement and will not
be responsible to anyone other than Foresight for providing the
protections afforded to clients of Numis, or for providing advice
in relation to the contents of this announcement or any matters
referred to herein. Neither Numis nor any of its affiliates owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Numis in connection
with this announcement, any statement contained herein or
otherwise.
[1] Unaudited AUM as at 30 June 2022
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