SANNE, a provider of alternative asset and corporate administration services, has entered into an agreement to acquire Luxembourg Investment Solutions S.A. and Compliance Partners S.A., (the “acquired companies”).
LIS is a 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, will remain with the group post completion.
The Acquisition will provide SANNE with a platform in Luxembourg, a globally significant market, from which to broaden its services. The acquisition follows SANNE’s recently granted licence by the Central Bank of Ireland to provide services from its Dublin operation.
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 €55 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 €100 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 €1.4 million and had gross assets of €2.4 million, whilst CP made EBITDA of €0.2 million and had gross assets of €0.4 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 €4.2 million.
SANNE has today also entered into an agreement with HSBC to extend the Group’s existing RCF from £14 million to £44 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.”