Related Party Transactions related to S4S Ventures

RNS Number : 9075L

S4 Capital PLC

18 May 2022

 

18 May 2022

S4 Capital plc

("S⁴Capital", the "Company" or the "Group")

Related Party Transactions related to S4S Ventures

S⁴Capital plc (SFOR.L), the tech-led, new age/new era digital advertising and marketing services company, announces the following details relating to transactions related to the first close of S4S Ventures ("S4S Ventures") which is structured as two new funds of up to, in aggregate, US$100 million. S4S Ventures aims to invest in companies across five principal areas: Martech, Adtech, Data Technology, Creative Technology, and Emerging Digital Media/Content. It will focus on investments which capture opportunities presented by the next wave of digital transformation in the marketing and advertising sectors, primarily at early funding stages.

S4S Ventures is particularly interested in supporting companies providing solutions for: (a) acceleration of programmatic advertising across Connected TV, gaming and digital audio ecosystems, (b) data warehousing, ingestion and analysis for the purposes of identity resolution, (c) transformation of content development and underlying workflows, by leveraging cloud computing and artificial intelligence infrastructure, (d) monetisation of metaverse opportunities, through development of software tools to facilitate/enable brand and creator participation, and (e) emerging digital media capturing the attention of Generation Z.

S4S Ventures will invest globally, but with an emphasis on the US, Europe and the Middle-East.

Structure

· S4S Ventures comprises two funds: a Luxemburg limited partnership, S4S Ventures SCSp-RAIF (the "Fund"), with S4S Ventures General Partner S.À R.L., a Luxembourg company, as its general partner, and a Delaware limited partnership, S4S Ventures LP (the "Delaware Fund"), with S4S Ventures General Partner LLC, incorporated in Delaware, as its general partner.

· S4S Ventures is led by Sanja Partalo, a highly experienced digital industry specialist and investor who was formerly Global Head of Strategic Development and Partnerships at WPP. S⁴Capital and Stanhope Capital ("Stanhope Capital") as founders of S4S Ventures act as part of the General Partner, which is a 50/50 joint venture between the S⁴Capital group and Stanhope Capital. Daniel Pinto, Sir Martin Sorrell and Scott Spirit also sit on its investment committee. Founders and senior employees of Stanhope Capital and S⁴Capital (but not S⁴Capital itself) are investing in S4S Ventures.

· Ms. Partalo and the S4S Ventures team will benefit from the support of the S⁴Capital network, with over 8,800 people operating from 33 countries, and from Stanhope Capital's established investment expertise and track record in both private and public markets. S4S Ventures is uniquely positioned to identify, source and help scale up the next generation of market leaders in the industry.

· A proportion of the carried interest from S4S Ventures has been allocated to a group company of S⁴Capital.  It is anticipated that this will be used to remunerate S⁴Capital's people who provide investment ideas to S4S Ventures, and only residual value (if any) will be received by the S⁴Capital group.

· In connection with S4S Ventures, S⁴Capital and certain of its directors have entered into a series of material related party transactions under Disclosure Guidance and Transparency Rule 7.3 (the "Related Party Transactions"). This announcement is made under and in compliance with Disclosure Guidance and Transparency Rule 7.3.8.

Arrangements relating to the establishment of S4S Ventures

· On 13 May 2022, S⁴Capital and Stanhope Capital entered into a joint venture agreement in relation to S4S Ventures, pursuant to which the parties agreed to formalise their joint venture by adopting and implementing their agreed principle terms of the joint venture and S4S Ventures. Stanhope Capital is a related party to S⁴Capital by virtue of Daniel Pinto (a director of S⁴Capital) being the founder and Chief Executive Officer of Stanhope Capital.

· On 13 May 2022, S4 Capital 2 Limited (a wholly-owned subsidiary of S⁴Capital), Portman Square General Partner S.À R.L. and S4S Ventures General Partner S.À R.L., entered into a shareholders' agreement in relation to S4S Ventures which governs the shareholders' joint ownership, management, control and operation of S4S Ventures General Partner S.À R.L., their joint management, control and operation of S4S Ventures General Partner LLC and their respective rights and obligations as shareholders in S4S Ventures General Partner S.À R.L.. Portman Square General Partner S.À R.L. is a related party to S⁴Capital by virtue of Daniel Pinto (a director of S⁴Capital) being the founder and Chief Executive Officer of Stanhope Capital, the sole shareholder of Portman Square General Partner S.À R.L..

Director and senior management investments into S4S Ventures

Sir Martin Sorrell, Scott Spirit, Daniel Pinto, Sue Prevezer, Victor Knaap and Wesley ter Haar have committed to invest, directly or through related entities, US$9,350,000, in aggregate, into S4S Ventures, a related party of S⁴Capital by virtue of (i) S⁴Capital being one of its General Partners and (ii) Daniel Pinto (a director of S⁴Capital) being founder and Chief Executive Officer of Stanhope Capital.

The directors of S⁴Capital independent of S4S Ventures consider the terms of the Related Party Transactions to be fair and reasonable from the perspective of S⁴Capital and its shareholders who are not a related party.

Enquiries

S4 Capital plc	Tel: [phone]
Sir Martin Sorrell, Executive Chairman
Powerscourt (PR adviser to S4Capital plc)	Tel: [phone]
Robin O'Kelly
Jane Glover

About S⁴ Capital

S⁴ Capital (SFOR.L) is the tech-led, new age/new era digital advertising and marketing services company, established by Sir Martin Sorrell in May 2018.

Its strategy is to build a purely digital advertising and marketing services business for global, multinational, regional, local clients and millennial-driven influencer brands. This will be achieved by integrating leading businesses in three practice areas: content, data&digital media and technology services, along with an emphasis on "faster, better, cheaper" executions in an always-on consumer-led environment, with a unitary structure.

Digital is by far the fastest-growing segment of the advertising market. S⁴Capital estimates that in 2021 digital accounted for approximately 60% or $420-450 billion of total global advertising spend of $700-750 billion (excluding over $500 billion of trade promotion marketing, the primary target of the Amazon advertising platform) and projects that by 2022 total global advertising spend will expand to $770-850 billion and digital's share will grow to approximately 65% and by 2024 to approximately 70%, accelerated by the impact of covid-19.

In 2018, S⁴Capital combined with MediaMonks, the leading AdAge A-listed creative digital content production company led by Victor Knaap and Wesley ter Haar, and then with MightyHive, the market-leading digital media solutions provider for future thinking marketers and agencies, led by Peter Kim and Christopher S. Martin.

Since then, MediaMonks and MightyHive have combined with more than 25 companies across content, data&digital media and Technology services. For a full list, please see the S⁴Capital website.

In August 2021, S⁴Capital launched its unitary brand by merging MediaMonks and MightyHive into Media.Monks, represented by a dynamic logo mark that features MightyHive's iconic hexagon. As the operational brand, Media.Monks underpins S⁴Capital's agility, digital knowledge and efficiency and is the next step in delivering on its foundational promise to unify content, data&digital media and Technology services.

Victor Knaap, Wesley ter Haar, Pete Kim, Christopher Martin, Mary Basterfield and Scott Spirit all joined the S⁴Capital Board as Directors. The S4Capital Board also includes Rupert Faure Walker, Paul Roy, Daniel Pinto, Sue Prevezer, Elizabeth Buchanan, Naoko Okumoto, Margaret Ma Connolly, Peter Rademaker and Miles Young.

The Company now has over 8,800 people in 33 countries across the Americas, Europe, the Middle East and Africa and Asia-Pacific and a current market capitalisation of approximately £1.59 billion (c.$1.99 billion) and would rank in the FTSE 200. It achieved Unicorn status in a little over one year, unique in the advertising and marketing services industry. Sir Martin was CEO of WPP for 33 years, building it from a £1 million "shell" company in 1985 into the world's largest advertising and marketing services company with a market capitalisation of over £16 billion on the day he left. Today its market capitalisation is £10.9 billion, dropping into third place behind both Omnicom and Publicis for the first time ever. Prior to that Sir Martin was Group Financial Director of Saatchi & Saatchi Company Plc for nine years.

 

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