TIDMLIO
RNS Number : 8929R
Liontrust Asset Management PLC
15 December 2016
Embargoed until 7am on 15 December 2016
Stock Exchange Announcement
LIONTRUST ASSET MANAGEMENT PLC
Proposed Acquisition of Alliance Trust Investments Limited
Introduction
Liontrust Asset Management Plc ("Liontrust" or the "Company"),
the specialist independent fund management group, today announces
that it has entered into a conditional share purchase agreement
(the "SPA") with Alliance Trust Plc ("Alliance Trust") to purchase
(the "Proposed Acquisition") the entire issued share capital of
Alliance Trust Investments Limited ("ATI") for a total
consideration of up to GBP30 million (inclusive of the net asset
value of ATI) (the "Consideration").
The Proposed Acquisition includes the highly rated fund
management team at ATI (the "ATI Investment Team") headed by Peter
Michaelis. The team has vast experience of and a long-term pedigree
in sustainable investment.
On completion of the Proposed Acquisition ("Completion"), the
ATI Investment Team will continue to manage the sub-funds of the
Alliance Trust Sustainable Future ICVC (the SF Absolute Growth
Fund, SF Cautious Managed Fund, SF Corporate Bond Fund, SF
Defensive Managed Fund, SF European Growth Fund, SF Global Growth
Fund, SF Managed Fund, UK Ethical Fund and SF UK Growth Fund), the
sub-fund of the Alliance Trust Investment Funds ICVC (Monthly
Income Bond Fund), the SF Pan-European Equity (a sub-fund of
Luxcellence SICAV) (the "Funds") and one Institutional segregated
account.
Highlights of the Proposed Acquisition include:
- The acquisition of ATI is expected to increase Liontrust's
assets under management ("AuM") by approximately GBP2.3 billion to
more than GBP8 billion.
- This is a highly complementary acquisition that enhances
Liontrust's fund management capability and remains true to the
Company's ethos of developing highly skilled teams with excellent
investment processes to satisfy client demand.
- ATI provides Liontrust with a distinct approach to investing
in equities and fixed income and an experienced and highly
respected fund management team.
- Over five years, ATI's nine equity and fixed income funds are
in the first or second quartile of their respective sectors.
- The acquisition broadens distribution opportunities and will
expand Liontrust's client base further in both the UK and
internationally by adding a team focused on sustainable investment
through active management.
- The Consideration will be satisfied by GBP17 million of new
ordinary shares ("Ordinary Shares") of 1 pence each in the capital
of the Company (the "Consideration Shares"), up to GBP3 million in
cash, dependent on the future level of AuM managed by the ATI
Investment Team, and up to GBP10 million for the net asset value of
ATI. Further particulars of the Consideration are set out in the
paragraph headed "Details of the Proposed Acquisition" below. All
shares issued to Alliance Trust will be subject to a 12 month lock
up commencing from the date of issue.
Information on ATI
ATI's AuM relating to the Funds and the segregated account as at
close of business on 30 November 2016 (being the latest practicable
date prior to the date of this announcement) was GBP2,343 million,
broken down as follows:
Fund/Account name UK Retail Institutional Offshore Total
AuM (GBPm) AuM (GBPm) AuM (GBPm) AuM (GBPm)
----------------------------- ------------ -------------- ------------ ------------
SF Absolute Growth Fund 122 - - 122
----------------------------- ------------ -------------- ------------ ------------
SF Cautious Managed Fund 17 - - 17
----------------------------- ------------ -------------- ------------ ------------
SF Corporate Bond Fund 340 - - 340
----------------------------- ------------ -------------- ------------ ------------
SF Defensive Managed Fund 19 - - 19
----------------------------- ------------ -------------- ------------ ------------
SF European Growth Fund 152 - - 152
----------------------------- ------------ -------------- ------------ ------------
SF Global Growth Fund 157 - - 157
----------------------------- ------------ -------------- ------------ ------------
SF Managed Fund 568 - - 568
----------------------------- ------------ -------------- ------------ ------------
UK Ethical Fund 314 - - 314
----------------------------- ------------ -------------- ------------ ------------
SF UK Growth Fund 233 - - 233
----------------------------- ------------ -------------- ------------ ------------
Monthly Income Bond Fund 234 - - 234
----------------------------- ------------ -------------- ------------ ------------
SF Pan-European Equity Fund - - 142 142
----------------------------- ------------ -------------- ------------ ------------
Segregated Account - 45 - 45
----------------------------- ------------ -------------- ------------ ------------
Total 2,156 45 142 2,343
----------------------------- ------------ -------------- ------------ ------------
Source: ATI (includes GBP90 million of Alliance Trust seed
money, but excludes GBP54 million of internal fund of fund
money).
The Funds' historic performance is as follows:
% Return/ % Return/ % Return/ % Return/ Launch
Quartile Quartile Quartile Quartile date
ranking ranking ranking ranking
- since - 5 year - 3 year - 1 year
launch
---------------------- ---------- ---------- ---------- ---------- -----------
SF Absolute Growth 74.9% 84.9% / 27.8% / 12.8% /
Fund / 4 1 1 2 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
SF Cautious Managed 19.1%
Fund / 2 - - 6.9% / 4 23/07/2014
---------------------- ---------- ---------- ---------- ---------- -----------
SF Corporate Bond 98.2% 43.3% / 18.3% /
Fund / 3 1 2 6.7% / 2 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
SF Defensive Managed 17.4%
Fund / 1 - - 6.6% / 3 23/07/2014
---------------------- ---------- ---------- ---------- ---------- -----------
SF European Growth 145.3% 86.4% / 22.5% / 11.9% /
Fund / 2 2 2 2 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
SF Global Growth 66.4% 92.8% / 34.0% / 14.8% /
Fund / 4 2 3 4 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
95.7% 73.2% / 25.1% /
SF Managed Fund / 4 1 1 9.0% / 3 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
177.1% 82.2% / 17.2% / -0.1% /
UK Ethical Fund / 2 2 2 4 10/05/1999
---------------------- ---------- ---------- ---------- ---------- -----------
118.4% 85.7% / 21.5% /
SF UK Growth Fund / 3 1 1 4.8% / 3 19/02/2001
---------------------- ---------- ---------- ---------- ---------- -----------
Monthly Income 38.3% 42.1% / 12.4% /
Bond Fund / 4 2 4 5.3% / 4 14/06/2010
---------------------- ---------- ---------- ---------- ---------- -----------
SF Pan-European 105.1% 65.1% / 12.4% / -12.5% /
Equity Fund / 2 2 3 4 19/02/2004
---------------------- ---------- ---------- ---------- ---------- -----------
Source: Financial Express, to 30 November 2016 unless otherwise
stated. The above funds are all sub-funds of two UK authorised
open-ended investment companies with the exception of the SF
Pan-European Equity Fund which is a sub-fund of a Luxembourg
domiciled SICAV. Past performance is not a guide to the future; the
value of investments and the income from them can fall as well as
rise. Investors may not get back the amount originally
subscribed.
Background to and reasons for the Proposed Acquisition
The acquisition of ATI, including 11 sustainable investment
funds managed by the ATI Investment Team, is attractive to
Liontrust for a number of reasons.
It continues the expansion of our fund management capability
through the addition of a talented team running money in a style
where we have identified strong current and future demand.
The ATI Investment Team, which complements our existing seven
fund management teams and is headed by Peter Michaelis, is very
experienced and has an excellent long-term track record. The team
has a clear and distinct investment process in managing equity and
fixed income funds that is proven through different economic and
market environments. The team will continue to manage the funds
using the same investment process after joining Liontrust.
The Proposed Acquisition provides Liontrust with a strong
proposition in sustainable investment. The ATI investment Team has
demonstrated that sustainable investment and the funds they manage
can outperform conventional funds over the long term. It is a good
time for Liontrust to diversify into this investment style because
of the opportunities that the UK retail, institutional and European
markets offer sustainable investment funds.
John Ions, Chief Executive of Liontrust, said: "We have been
very impressed by Peter Michaelis and the team at ATI. They will be
an excellent addition to our seven teams as they are very
experienced, have a clear and robust investment process and have
shown that sustainable investment can provide strong investment
returns as well as meeting investors' values.
"The team brings with it a broad range of existing equity and
fixed income funds and a long-term track record: Peter was at Aviva
Investors, including as Head of Sustainable and Responsible
Investment, for 11 years before moving to ATI in August 2012.
"There is strong demand for sustainable investment in the UK and
internationally. Increasingly, consumers expect the companies they
use to be socially responsible and the demand for sustainable
investment will only grow with the rise of millennials. The
acquisition of ATI puts us in a very strong position to meet this
demand and we look forward to promoting the team and their funds in
the UK and across continental Europe."
Peter Michaelis said: "We have been attracted to Liontrust by
the culture of the company and the environment provided for fund
managers. We will continue to focus on running money according to
our own investment process, in which we look for well managed
companies that have good business fundamentals and which we believe
the market undervalues.
"Liontrust will provide the team and investors with long-term
stability. We have also been impressed by the strength of
Liontrust's brand profile and its distribution capability. This is
a very important consideration for us as we look to raise the
profile of the team and build on our impressive long-term
investment performance."
Details of the Acquisition
The principal agreement governing the Proposed Acquisition is
the SPA. Under the terms of the SPA, the Company has conditionally
agreed to acquire the entire issued share capital of ATI for the
following Consideration:
-- GBP13.6 million being 4,060,792 new Ordinary Shares(1) (being
the Consideration Shares), to be allotted and issued to Alliance
Trust at Completion;
-- GBP3.4 million being 1,015,198 new Ordinary Shares(1) (being
the Consideration Shares), to be allotted and issued to Alliance
Trust within ten business days of the first anniversary of
Completion;
-- GBP3 million in cash within ten business days of the second
anniversary of Completion, subject to the average AuM managed by
the ATI Investment team for the three month-ends prior to the
second anniversary of Completion being at least GBP3 billion;
and
-- an amount equal to the net asset value of ATI as at
Completion (on a pound-for-pound basis, subject to a cap of GBP10
million).
All shares issued to Alliance Trust will be subject to a 12
month lock up commencing from the date of issue. The Consideration
Shares represent approximately 10 per cent. of the issued share
capital of Liontrust following the issue of such Consideration
Shares and ignoring any dilutive effect of subsequent issues (e.g.
pursuant to the exercise of share options).
Completion is conditional upon, amongst other things, obtaining
applicable regulatory approvals and to the SPA in respect of the
Proposed Acquisition becoming unconditional in all respects and not
having been terminated in accordance with its terms prior to
Completion. Completion is expected to take place in early April
2017.
Implementation of the Proposed Acquisition is not conditional on
the approval of Alliance Trust shareholders at the Alliance Trust
General Meeting regarding the change in Alliance Trust's investment
mandate.
Notes:
(1) Based on the average closing price of Ordinary Shares over
the 30 trading days prior to the day before announcement of the
Proposed Acquisition.
Financial effects
The value of the gross assets being acquired by Liontrust is
GBP17.542 million (as at 31 December 2015). The loss before tax for
ATI for the year ended 31 December 2015 was GBP2.053 million.
Currently ATI is trading profitably on a run-rate basis (before
exceptional items).
The integration of ATI will require the Company to incur
aggregate re-organisation and transaction costs of approximately
GBP4 million which will be treated as an exceptional item to be
incurred in the period ended 31 March 2017 and 31 March 2018.
Following completion of the integration process we would anticipate
ATI will achieve operating margins broadly in line with the
existing Liontrust business. Accordingly we expect the Proposed
Acquisition to be earnings enhancing with regards to our adjusted
diluted earnings per share with effect from the financial year
ending 31 March 2018.
For further information please contact:
Liontrust Asset Management 020 7412 1700
John Ions, Vinay Abrol www.liontrust.co.uk
Simon Hildrey - Head of Marketing & Distribution
Strategy
Numis Securities Limited 020 7260 1000
Charles Farquhar, Andrew Holloway
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nick Harland
Background on Peter Michaelis
Peter has worked in investment management since 2000. Before
joining ATI in August 2012, Peter spent 11 years at Aviva Investors
where, from 2005, he was Head of Sustainable and Responsible
Investment. Since 2005, he has overseen the consistent growth of
the Sustainable Future Fund range and the strong performance it has
delivered. Peter became head of Investments at ATI in October 2014
and Executive Director of ATI in February 2016. Peter holds an MA
in Physics from Oxford University, an MSc in Energy &
Environmental Engineering and a PhD in Environmental Economics. In
addition, he holds the CFA Society of the UK Investment Management
Certificate.
Forward Looking Statements
This announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
businesses and plans of Liontrust and its subsidiaries (the
"Group"). These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances that have not yet occurred. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements and forecasts. As a result, the Group's actual future
financial condition, results of operations and business and plans
may differ materially from the plans, goals and expectations
expressed or implied by these forward-looking statements. Liontrust
undertakes no obligation publicly to update or revise
forward-looking statements, except as may be required by applicable
law and regulation (including the Listing Rules of the Financial
Conduct Authority). Nothing in this announcement should be
construed as a profit forecast or be relied upon as a guide to
future performance.
Other information
The release, publication, transmission or distribution of this
announcement in, into or from jurisdictions other than the United
Kingdom may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published,
transmitted or distributed should inform themselves about and
observe such restrictions. In particular (but without limitation)
this announcement is not for release, publication or distribution,
directly or indirectly, to US persons, or into the United States,
or into or from Canada or any other jurisdiction in which the same
would be unlawful. Any failure to comply with the restrictions may
constitute a violation of the securities laws of any such
jurisdiction.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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