Acquisition

RNS Number : 5312L

Liontrust Asset Management PLC

02 August 2011

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIERCTLY, TO US PERSONS, OR INTO THE UNITED STATES, OR INTO OR FROM CANADA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

Embargoed until 7am on 2 August 2011

Stock Exchange Announcement

LIONTRUST ASSET MANAGEMENT PLC

Liontrust buys the fund management business of

Occam Investment Management (Malta) Limited, Occam Asset Management LLP and

Occam Investment Services Limited

Introduction

Liontrust Asset Management PLC ("Liontrust" or the "Company"), the specialist independent fund management group, today announces that it (together with its direct and indirect subsidiaries, Liontrust International (Guernsey) Limited, Liontrust Investment Partners LLP and Liontrust Fund Partners LLP (together the "Liontrust Purchasers")) has entered into a conditional agreement to purchase (the "Acquisition") the fund management business of Occam Investment Management (Malta) Limited, Occam Asset Management LLP ("OAM LLP") and Occam Investment Services Limited (together, "Occam"). The Acquisition includes the Occam Emerging Markets and Asia fund management teams and the benefit of contracts to manage each of the Occam Emerging Markets Opportunities, Occam Asia Focus, Occam Asia Absolute Return, Occam Sorbus, Occam Europe Focus and Occam Diversity funds. Liontrust's James Inglis-Jones and Gary West will take over as fund managers of the Occam Sorbus and Europe Focus funds on completion of the Acquisition ("Completion").

Highlights of the Acquisition include:

-      Highly complementary acquisition enhancing Liontrust and Occam in fund management, distribution and operations. Occam brings a number of experienced and talented individuals to Liontrust.

-      Occam provides Liontrust with two of the faster growing asset classes by adding Asia and Global Emerging Markets funds to Liontrust's existing UK and European range and two experienced and highly respected fund management teams.

-      Occam brings a Dublin range of funds and established distribution capability in continental Europe, the Middle East and other international markets to supplement Liontrust's traditional focus on UK-based investors. Occam also enhances Liontrust's marketing and operations teams.

-      The transaction marks the latest step in a successful 16 month phase of growth for Liontrust and the start of the Company's next stage of expansion.

-      Occam increases Liontrust's assets under management ("AuM"). On 30 June 2011, Liontrust's assets under management were £1.309 billion (excluding the credit business related assets to produce like-for-like totals). This represents a 33% increase on the £984 million of assets under management on 30 June 2010 (excluding the credit business related assets to produce like-for-like totals). As previously announced, in April 2011 Liontrust entered into a conditional business purchase agreement for the sale of its credit business to Avoca Capital Holdings for 3.75% of the credit business's AuM, payable in cash. This transaction completed, subject only to determination of the consideration, on 30 June 2011.

Information on Occam

Occam's AuM as at close of business on 28 July 2011 (being the latest practicable date prior to the date of this announcement) was £124 million, broken down as follows:

	Total	Dublin UCITS	Hedge Funds
	(£m)	(£m)	(£m)
Emerging Markets equities	65	65	-
Asia equities	31	31	-
European equities	28	16	12
Total	124	112	12

Source: OAM LLP. Occam Diversity Fund is not included in the above table as it is a fund of fund that only invests in Occam funds.

Occam's AuM as at Completion will be transferred to the Liontrust Purchasers.

Occam's fund performance is as follows:

Funds	3 months	1 year	Inception to date	Inception date
Emerging Markets Opportunities (1) (2)	(5.13%)	5.14%	14.60%	22/04/2009
Asia Focus (1) (2)	1.64%	21.39%	36.20%	09/09/2008
Asia Absolute (1) (2)	0.00%	(0.11%)	(10.10%)	01/12/2009
Europe Focus (1) (3)	0.75%	16.81%	20.20%	08/09/2008
Sorbus (3) (4) (5)	(1.33%)	2.77%	6.91%	30/11/2009

Source: OAM LLP, total return, to 30 June 2011, past performance is not a guide to the future. Occam Diversity Fund is not included in the above table as it is a fund of fund that only invests in Occam funds.

(1) - Sub-fund of the Occam Umbrella Fund plc, a Dublin UCITS

(2) - USD denominated share class performance

(3) - EUR denominated share class performance

(4) - A Cayman Islands domiciled hedge fund

(5) - The fund strategy was updated on 30 November 2009

Background to and reasons for the Acquisition

The acquisition of Occam is a further stage in the expansion of Liontrust. The net sales of £81 million for the financial year ended 31 March 2011 represented the first time since the financial year ended 31 March 2004 that Liontrust has been in a net positive sales position over a financial year.

This has led to Liontrust reaching £1.309 billion in assets under management on 30 June 2011 (excluding the credit business related assets to produce like-for-like totals). Liontrust Special Situations Fund, for example, has grown from £14 million in June 2010 to £138 million as at the date of this announcement. During this expansion over the past 16 months, Liontrust has restructured its business, initiated a marketing campaign to develop the Company's brand and raise awareness of Liontrust's strong fund performance and broaden its client base.

As we have stated publicly on a number of occasions, to develop the business further we have been seeking to expand our fund management capability into new asset classes. The Acquisition achieves these goals as Occam has Asia and Emerging Markets fund management teams. These areas represent fast growing economies and two of the faster growing asset classes.

The Asia and Emerging Markets management teams at Occam have good pedigrees and strong long-term track records. Before joining Occam, Eoghan Flanagan was co-founder of the highly successful Thames River Nevsky team and James Mellersh was a senior member of the team. Mark Williams managed the Friends Provident International GIP Far East Sicav and F&C Pacific Growth funds.

The fund management teams at Occam join a group that already has two very strong teams in Anthony Cross/Julian Fosh and James Inglis-Jones/Gary West. This strength was recently evidenced when the Liontrust Special Situations Fund was named the Best UK Growth Fund in the Investment Week Fund Manager of the Year Awards 2011.

The acquisition of Occam also enhances other areas of Liontrust's business. Jonathan Hughes-Morgan and David Sheppard, co-founders of Occam, have many years of experience of running businesses and identifying and recruiting fund managers. Jonathan, David and their sales team and Occam's Dublin range of funds strengthen the distribution capability at Liontrust, notably in continental Europe, the Middle East and other international markets. Occam also enhances the marketing and operations teams at Liontrust.

It is anticipated that there will be little, if any, disruption for investors in Occam's funds. There is no intention to change the way any of the Emerging Markets and Asia funds are managed and fund managers will continue to be free to manage their funds according to their own investment processes and market views. Following Completion, Liontrust will provide investors with a wide choice of asset classes and fund management. With more assets under management, the fund management teams will enjoy greater resources and enhanced infrastructure.

John Ions, Chief Executive of Liontrust, said: "This is the next step in the development of Liontrust. The business now has the foundations from which to grow following the restructuring of the business, developing the brand, raising awareness and returning to net inflows. Having re-established these fundamentals, now is the right moment at which to make this acquisition, expanding our fund management capability and diversifying into new asset classes which are experiencing increasing investor interest.

"This acquisition greatly enhances Liontrust and provides a stronger foundation from which to grow, benefiting clients and shareholders alike."

Jonathan Hughes-Morgan, Chief Executive of Occam, added: "There is a good fit between Occam and Liontrust. John and I have known each other for many years and have like-minded views on the investment management industry. There is a can-do attitude at both companies and bureaucracy is minimised so decisions can be made quickly and be rapidly implemented.

"Liontrust is attractive because it is a business with positive momentum, an increasingly strong brand and excellent fund management teams. Liontrust provides greater resources and infrastructure for us, giving us a broader base from which to move forward."

Details of the Acquisition

Subject to Completion, the Occam Emerging Markets and Asia fund management, sales, marketing and operations teams will leave Occam and join the Liontrust group. The total consideration for the acquisition will be 3 per cent. of the Occam's AuM transferred (to be determined following Completion) plus £187,500 (the "Consideration"). For illustrative purposes, based on Occam's AuM as at close of business on 28 July 2011 (being the last practicable date prior to the date of this announcement) of £124 million, the Consideration would be £3.91 million. The Consideration is capped such that the total Consideration payable may not exceed 24.99 per cent. of Liontrust's market capitalisation as at the date of Completion.

The Consideration is to be satisfied by the allotment and issue of such number of new Liontrust shares ("Consideration Shares") as is equal to the value of the Consideration divided by the mean closing prices of Liontrust Shares (as quoted on Bloomberg) on the thirty dealing days prior to Completion, save as regards to 0.75 per cent. of the value of Occam's AuM transferred at Completion, and a payment of £187,500, each of which are to be satisfied in cash.  The Parties may also agree to satisfy some or all of the other elements of the Consideration in cash. The run rate profitability of Occam based on current Occam AuM, excluding completion and business combination related costs, is an annualised operating loss of approximately £0.3 million. The value of the gross assets being acquired by the Liontrust Purchasers is equal to the Consideration payable for Occam.

As a result of certain caps on the Consideration agreed for regulatory purposes (and subject to determination of Occam's AuM at Completion), the Consideration is expected to be satisfied in a number of tranches over a twelve month period from Completion. The Consideration Shares will be allotted and issued to OAM LLP and will be subject to lock-up arrangements of (subject to certain exceptions) three years, provided that (save in certain limited circumstances) after the first anniversary of Completion, OAM LLP may distribute such shares to certain Occam executives provided further, as a condition precedent thereto, the transferees agree to enter into lock-up arrangements lasting (subject to certain exceptions) until the second or third anniversary of Completion (depending on the seniority of the executive).

Completion is conditional upon, amongst other things, obtaining applicable regulatory approvals as well as the approval of Liontrust's shareholders as to the allotment of the Consideration Shares, and to the business purchase agreement in respect of the Acquisition (the "Business Purchase Agreement") having becoming unconditional in all respects and not having been terminated in accordance with its terms prior to Completion. The Business Purchase Agreement can be terminated at any time prior Completion if (amongst other things) Occam's AuM at Completion is to be less than $150,000,000 or if any of the warranties given by Occam in that agreement is not, or has ceased to be, true and accurate in any material respect.

For the directors of Liontrust to be able to allot the Consideration Shares, it will be necessary for the shareholders of Liontrust to approve the same for the purposes of section 551 of the Companies Act 2006. Accordingly, subject to and following the satisfaction of certain applicable regulatory approvals set out in the Business Purchase Agreement (the "Relevant Approvals"), Liontrust intends to post a circular to its shareholders convening a general meeting of the Company (the "Liontrust General Meeting") to seek the requisite authority to allot the Consideration Shares. It is currently expected that the Relevant Approvals may take approximately six weeks to obtain and that, accordingly, the circular is unlikely to be posted before mid September, the Liontrust General Meeting is unlikely to be held before early October 2011 with Completion unlikely to take place before mid October 2011.

Director changes

Subject to Completion, Jonathan Hughes-Morgan, Chief Executive Officer of Occam, will join the board of Liontrust as an Executive Director. Jonathan began his career as a trainee fund manager with Henderson, moving after four years to Sun Life as a fund manager. Following spells at Odey Asset Management and Edmond de Rothschild, Jonathan joined Jardine Fleming to run its European business for three years. In 1998 he co-founded Thames River Capital with Charlie Porter. Jonathan was Managing Director of Thames River, leaving at the end of 2006 to set up Occam. Jonathan graduated from the University of Warwick with a degree in Management Science.

Jonathan Hughes-Morgan will become a member of Liontrust Fund Partners LLP ("LFP") and his services as a director of the Company and other group entities will be provided under the terms of a services agreement between LFP and the relevant group entity.

Current directorships - None.

Other directorships in the previous five years - None.

The Company confirms that there are no further matters in relation to Jonathan Hughes-Morgan to be disclosed pursuant to the requirements of paragraph LR 9.6.13 R of the Listing Rules of the UK Listing Authority.

For further information please contact:

Liontrust Asset Management PLC                            020 7412 1700

John Ions                                                                             www.liontrust.co.uk

Vinay Abrol

Simon Hildrey - Head of Marketing & Communications

Altium                                                                                  020 7484 4040

Sam Fuller

Paul Chamberlain

Background on David Sheppard, International Sales and Hedge Fund Strategy

David spent seven years at SG Corporate Investment Bank heading the Thomsons Reuters number 1 rated European sales and trading team in London. Previously he was head of international sales at Gartmore Investment Management where he was responsible for UCITS product development and distribution. David started working in strategy consulting with Cap Gemini focusing on European financial services companies, subsequently moving to Fleming Asset Management where he was responsible for asset gathering and product development in Continental Europe. David graduated from the University of Portsmouth with a degree in French, and holds a Master's degree from Cranfield School of Management

Background on Occam Fund Managers

Eoghan Flanagan - Fund Manager and Head of Emerging Markets Equities

Eoghan joined Occam as Head of the Emerging Markets team in February 2009. Eoghan started his career with Baring Asset Management as an Emerging Markets Analyst in 1997. In 2000, he was co-founder of the Thames River Nevsky team. Eoghan was a key manager of the Thames River Nevsky Fund from inception until he ceased to be actively involved with the management of the fund in September 2006. He also co-managed the Thames River Eastern European Fund ("TREEF"). Both the Nevsky Fund and TREEF were top-rated funds within their universes. He remained a Partner in that business until the end of 2008. Eoghan graduated with a degree in Mathematics from Cambridge University in 1997.

James Mellersh - Fund Manager, Emerging Markets Equities

James joined the Emerging Markets team at Occam in February 2009. He started his career with Société Générale as a Polish Equity analyst in 1996 and moved to Morgan Stanley in 1999 as an EMEA Financials Analyst. He spent a year working in a multi sector risk arbitrage fund at Rourke Capital Management before joining the Thames River Nevsky team in 2002 as GEM Financials Analyst. James was a partner in Nevsky Capital until late 2007. James graduated from London University in 1993 with a BA in History and in 1995 with an MA in Slavonic Studies.

Mark Williams - Fund Manager and Head of Asia Equities

Mark Williams joined Occam in October 2007. After leaving Cambridge University, Mark started his career in 1993 with James Capel Investment Management where he ran global investment mandates for discretionary portfolios. From August 1997, Mark joined Royal Sun Alliance to specialise in Asian investment, where he managed a number of mandates, including benchmark-measured, investment trust and peer group funds. In 2000 Mark took over the FPI GIP Far East Equity SICAV, then following the merger of ISIS Asset Management (born from the merger of Royal Sun Alliance and Friends Ivory & Sime) and F&C, he took over responsibility for the F&C Pacific Growth Fund, F&C's flagship high alpha retail fund. Mark graduated in 1993 with a Law degree from Cambridge University. He holds a Securities Institute Diploma.

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 Services 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

 

END

 

 

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