This
announcement contains inside information
Petershill Partners plc
("Petershill Partners"), today announces the sale of the majority
of its stake in General Catalyst at a significant premium and its
intention to pay a special dividend of 14.0 cents (USD) per
share
Highlights
·
Petershill Partners has
completed a sale of the majority of its stake in General Catalyst.
The sale arises from a capital restructuring being undertaken by
General Catalyst and external investors. The total nominal
consideration of US$726 million represents a 62% premium to the
US$447 million carrying value of the interests being sold as at 30
June 2024.
· Since
the initial investment was made into General Catalyst in 2018, the
business model of General Catalyst has evolved significantly from a
pureplay venture capital firm into a global investment and
transformation company, which is expected to result in a shift from
management fee-centric earnings towards longer term
performance-related value creation. Consequently, the change is
less aligned with the Petershill Partners' alternative asset
management investment strategy.
· The assets disposed
of by Petershill Partners comprise its interest in General
Catalyst's management fee earnings ("FRE") and future performance
related earnings ("PRE"). The Company will retain rights to PRE and
balance sheet assets relating to existing funds with a carrying
value of US$137 million as at 30 June 2024. These are expected to
be realised and run-off over time.
· The
US$726 million consideration is being paid in the form of
interest-bearing loan notes. US$207 million of the outstanding
principal amount of the loan notes is expected to be repaid in cash
by 31 March 2025 with the remaining US$519 million outstanding
principal amount being repaid over time. The initial interest rate
on the loan notes will be 10% per annum and will be payable on the
outstanding principal amount of the loan notes.
· The total
nominal consideration equates to 21% of Petershill Partners' market
capitalisation, based on the closing share price of 259 pence per
share on 15 January 2025. The impact of the sale is a reduction to
2025 distributable earnings of approximately 9%, based on current
consensus distributable earnings of US$382 million, predominately
reflecting reduced Partner Fee-related earnings. The Partner
Fee-related earnings interests in General Catalyst are structured
as a revenue share and the sale will accordingly reduce Petershill
Partners' FRE margin by about 4 percentage points. The impact on
2025E consensus adjusted earnings before interest cost and tax is
expected to be offset by the interest income from the loan notes,
whilst the notes are held[1].
· The
transaction further demonstrates Petershill Partners' value
creation model, where the blended discount rate implied in the
holding value of General Catalyst at 30 June 2024 was approximately
17%, compared to the implied blended discount rate on exit of
approximately 11%, and the typical reinvestment in new deals at an
implied blended discount rate of 15-20%. The transaction also
addresses the divergence between General Catalyst's future business
plan and Petershill Partners' alternative asset management
investment strategy. Petershill Partners retains a high quality and
diversified portfolio, with the top five partner firms by ownership
weighted AUM (Q2 2024) unchanged post the disposal. Since the start
of 2024 and including this disposal, the aggregate nominal
consideration due from sales of stakes in Partner-firms has
amounted to US$1,301 million relative to a carrying value of assets
disposed of US$930 million, a premium of approximately
40%.
· The Board intends
to retain the majority of the net proceeds from the sale for
redeployment into new investments. The Board also intends to
declare a special dividend of 14.0 cents (USD) per share,
equivalent to US$151 million, reflecting the return to shareholders
of the majority of the net gain on the disposal after providing for
taxes and fees. A further announcement on the timing of this
special dividend will be made after the first loan notes have been
repaid, which is expected to be at the end of the first quarter of
2025.
Ali
Raissi-Dehkordy and Robert Hamilton Kelly, Co-Heads of the
Petershill Business within Goldman Sachs Asset & Wealth
Management commented:
"This transaction further
demonstrates our ability to realise assets at attractive valuations
relative to their holding values and allows
us to exit the investment while facilitating General Catalyst's
vision of building a global investment and transformation company
over time. General Catalyst is an exceptional firm, and Petershill
Partners and General Catalyst have benefitted from seven years of
collaboration and growth. We wish them every success as they
continue to execute on their business plan, support innovative
founders and drive future global transformation. We see good
opportunities to redeploy the retained proceeds from the sale into
new investments that will drive attractive future returns for
shareholders."
Detailed
Notes:
· The
US$726 million consideration is being paid in the form of
interest-bearing loan notes. US$207 million of the outstanding
principal amount of the loan notes is expected to be repaid in cash
by 31 March 2025. The remaining US$519 million outstanding
principal amount of the loan notes will mature between the
6th and 8th years after issue and will have
an initial interest rate of 10.0%, increasing annually by 1.0% for
four years, with the first interest rate step up at the beginning
of 2026.There is no non-call period and it is possible that an
additional portion of the remaining US$519 million outstanding
principal amount of the loan notes will be repaid in 2025. There is
also a partial mandatory quarterly amortization of the loan notes
from 2026.
· The loan notes are an obligation of the main holding company
which owns the substantial majority of the businesses which form
part of the General Catalyst group and benefit from a range of
covenant and other credit protections.
· The
indicative IFRS gross gain is US$279 million, before deducting the
estimated increase in divestment fee accrual, estimated tax and
related charges.
· The
total divestment profit on the disposal relative to the
contribution value at the IPO of Petershill Partners is US$472
million. As at 30 June 2024, accrued divestment fees of US$38
million were held against the valuation of Petershill Partners'
interests in General Catalyst, and the divestment fee accrual in
respect of the General Catalyst interests is estimated to increase
by US$56 million as a result of the disposal. Divestment fees are
payable on realised cash and will only be payable when the loan
notes are repaid. There is an estimated increase in the
accrual for tax and related charges of US$28 million on the sale
which will be added to the existing accrual held of US$47
million.
ABOUT PETERSHILL PARTNERS
Petershill Partners and its
subsidiaries is a diversified, publicly listed, global alternatives
investment group focused on private equity and other private
capital strategies. Through its economic interests in a portfolio
of alternative asset management firms ("Partner-firms"), Petershill
Partners provides investors with exposure to the growth and
profitability of the alternative asset management industry.
Petershill Partners is operated by Goldman Sachs Asset Management
and is governed by a diverse and fully independent Board of
Directors (the "Board").
Through our Partner-firms, we have
exposure to US$328 billion of total assets under management ("AuM")
as at 30 September 2024, (US$308 billion on a pro-forma basis
excluding General Catalyst), comprising a diverse set of more than
232 long-term private equity and other private capital funds where
capital is typically locked in over a multi-year horizon. These
underlying funds generate recurring management fees and the
opportunity for meaningful profit participation over the typical 8+
year lifecycles of such funds. Petershill Partners believes its
approach is aligned with the founders and managers of its
Partner-firms and, as a result, allows Petershill Partners to
participate in these income streams in a way that provides
high-margin, diversified and stable cash flows for its
shareholders.
For more information, visit
https://www.petershillpartners.com.
Information on the website is not incorporated by reference into
this press release and is provided merely for
convenience.
ISIN: GB00BL9ZF303
ABOUT GENERAL CATALYST
General Catalyst was founded in 2000
and is headquartered in Cambridge, MA, with additional offices in
San Francisco, New York, London, Berlin and Bengaluru. General
Catalyst is a venture capital investment firm that focuses on
providing capital to meet the evolving needs of founders and their
businesses, including seed-stage, early-stage and growth equity
investments in enterprise technology and consumer
businesses.
For more information,
visit https://www.generalcatalyst.com/
Contact Information
Please direct any questions to
Petershill Partners Investor Relations, via e-mail, at
PHP-Investor-Enquiries@gs.com
Analyst / Investor enquiries:
|
Gurjit Kambo
|
|
+44 (0)
207 051 2564
|
Media enquiries:
These written materials are not an
offer of securities for sale in the United States. Securities may
not be offered or sold in the United States absent registration
under the US Securities Act of 1933, as amended, or an exemption
therefrom. The issuer has not and does not intend to register any
securities under the US Securities Act of 1933, as amended, and
does not intend to offer any securities to the public in the United
States. Any securities of Petershill Partners plc referred to
herein have not been and will not be registered under the US
Investment Company Act of 1940, as amended, and may not be offered
or sold in the United States or to "U.S. persons" (as defined in
Regulation S under the US Securities Act of 1933, as amended) other
than to "qualified purchasers" as defined in the US Investment
Company Act of 1940, as amended. No money, securities or other
consideration from any person inside the United States is being
solicited and, if sent in response to the information contained in
these written materials, will not be accepted.
This announcement contains inside
information for the purposes of Article 7 of assimilated Regulation
(EU) No. 596/2014 as it forms part of the law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as
amended. Upon publication of this announcement, this inside
information will be considered to be in the public
domain.
The person responsible for making
this announcement on behalf of Petershill Partners is Naguib
Kheraj, Chairman.
FORWARD-LOOKING
STATEMENTS
This press release may contain
forward-looking statements that involve substantial risks and
uncertainties. You can identify these statements by the use of
forward-looking terminology such as "may," "will," "should,"
"expect," "anticipate," "project," "target," "estimate," "intend,"
"continue," or "believe" or the negatives thereof or other
variations thereon or comparable terminology. You should read
statements that contain these words carefully because they discuss
our plans, strategies, prospects and expectations concerning the
business, operating results, financial condition and other similar
matters. These statements represent the Company's belief regarding
future events that, by their nature, are uncertain and outside of
the Company's control. There are likely to be events in the future,
however, that we are not able to predict accurately or control. Any
forward-looking statement made by us in this press release is based
upon information known to the Company on the date of this press
release and speaks only as of such date. Accordingly, no assurance
can be given that any particular expectation will be met and
readers are cautioned not to place undue reliance on forward
looking statements. Additionally, forward looking statements
regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the
future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), the Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
