Proposed change in strategy & Readmission Document

RNS Number : 5688T

AssetCo PLC

26 March 2021

 

NOT FOR RELEASE, DISTRIBUTION, PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION (EACH, A "RESTRICTED JURISDICTION").

Friday, 26 March 2021

Immediate Release

AssetCo plc

("AssetCo" or the "Company")

Proposed change in strategy

Publication of Readmission Document

and

Notice of General Meeting

Further to the announcement on 8 February 2021 of the Company's intention to change its business strategy to the development of an asset and wealth management business, the Company announces that it has posted to Shareholders the Readmission Document, including the Notice of General Meeting, which is now available on the Company's website.

Key Highlights

· Change in strategy to focus on acquiring, managing and operating asset and wealth management activities and interests, together with other related services.

· Martin Gilbert to become Chairman and Peter McKellar to become Deputy Chairman and Chief Executive Officer. Tudor Davies will become a non-executive Director of the Company.

· Implementation of annual bonus and long term incentive plan ("LTIP"), which is designed to reward, incentivise and retain the Company's executive Directors and senior management to deliver sustainable growth for Shareholders.

·   Intention to seek Shareholder support to disapply statutory pre-emption rights in respect of an amount equal to 100% of the Existing Share Capital, to enable the Company to raise cash to execute the New Strategy of making strategic acquisitions and developing the business, while widening and strengthening the Company's shareholder base.

Tudor Davies, Chairman commented ,

"During the last year, we successfully accumulated cash balances of approximately £55 million, from the realisation of receivables and bonds from our Abu Dhabi business and the successful conclusion of our litigation against our former auditors. However, there have been challenges in developing an overseas business in the Middle East, and the Board decided it was appropriate to review the structure and future strategy of the Company. This led to a tender offer to buy back 50 per cent. of the share capital at a cost of £26.9 million, followed by the proposal to utilise the AssetCo platform to build an exciting asset and wealth management business."

Capitalised terms in this Announcement shall have the meanings given to such terms in the Company's Admission Document published today.

Enquiries:

AssetCo plc

Tudor Davies, Chairman

Tel: [phone]

[phone]

Arden Partners plc

Nominated adviser and broker

John Llewellyn-Lloyd / Dan Gee-Summons / Nick Wright (Corporate Finance)

Simon Johnson (Corporate Broking)

Tel: [phone]

TooleyStreet Communications

Fiona Tooley

Email:    [e-mail]  

Mobile: [phone]

Maitland/AMO

Neil Bennett

Rachel Cohen

Tel: [phone]

AssetCo plc LEI number is : 213800LFMHKVNTZ7GV45

This announcement is not and does not constitute or form part of, and should not be construed as, an offer of securities for subscription or sale in any jurisdiction. Prospective investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and regulation.

The following information is extracted from the Readmission Document

Further Information

Proposed New Strategy

At present, the Company's strategy is focused on the provision of fire and rescue emergency services in the Middle East, with one operating branch in the UAE. In order to operate the branch in the UAE, the Company is required to have a commercial licence for the relevant operations undertaken there. The Company's current commercial licence was issued on 17 September 2020 and expires on 23 September 2021. Following the loss of its key contract in Abu Dhabi in October 2018, the Company has scaled back its existing operations and cost base, whilst seeking new contractual opportunities. To date, no new contracts have been won and the Directors are currently reviewing the status of this legacy business.

Subject to Shareholder approval at the forthcoming General Meeting, the Directors are proposing to change the strategy of the Company to the New Strategy of "acquiring, managing and operating asset and wealth management activities and interests, together with other related services". The New Strategy will principally focus on making strategic acquisitions and building organic activities in areas of the asset and wealth management sector where the Directors believe structural shifts have the potential to deliver exceptional growth opportunities. This could include strategic acquisitions of undervalued asset and wealth management businesses which have core capabilities that play to these structural shifts, and where active management can unlock value.

Proposed changes to the Board

Subject to the passing of the Resolutions, Martin Gilbert will become Chairman and Peter McKellar will become Deputy Chairman and Chief Executive Officer. Given his other business commitments it is anticipated that, as the Company develops, Peter McKellar will continue as Deputy Chairman and that a full time chief executive will be hired. On Readmission, Tudor Davies will become a non-executive Director of the Company.

It is expected that other senior individuals from across the asset and wealth management sector will join the business as the Company completes acquisitions and manages activities in the sector. It is likely that some of these individuals may be promoted to the Board as the business develops.

History of the proposed management team

Martin Gilbert has a long history in asset and wealth management. He co-founded Aberdeen Asset Management PLC in 1983 and was chief executive officer from 1991 to 2017. During that period Aberdeen Asset Management PLC grew, through a combination of organic growth and strategic acquisition, to become one of the world's leading independent asset managers with £308 billion of AUM. In 2017, Aberdeen Asset Management PLC merged with Standard Life plc, to become Standard Life Aberdeen plc. On merging, Standard Life Aberdeen plc was the biggest UK-based asset management company and the second biggest in Europe. Martin was co-chief executive officer and subsequently vice chairman until he retired from Standard Life Aberdeen plc in September 2020. Martin is chairman of Revolut Ltd and Toscafund, deputy chairman of River and Mercantile Group PLC and senior independent director of Glencore plc, alongside a number of other directorships.

Peter McKellar has spent nearly all of his working career in private markets, in particular private equity and infrastructure investment management and direct operating management. He retired in September 2020 as executive chairman and global head of private markets for Standard Life Aberdeen plc, where he oversaw investment management activities across private equity, infrastructure, real estate, natural resources, and certain private credit capabilities, totalling £55 billion of AUM.

Activity to date and development of an asset and wealth management business

On 8 January 2021, the Company acquired 2,500,000 ordinary shares in River and Mercantile Group PLC at £1.86 per share, for a total consideration of £4.7 million paid in cash. On 5 February 2021, the Company acquired a further 2,500,000 ordinary shares in River and Mercantile Group PLC at £2.28 per share, for a total consideration of £5.7 million paid in cash. The Directors believe that the investment in River and Mercantile Group PLC shares is attractive and that this company's activities and prospects are undervalued. In aggregate, the Company now has a 5.85% shareholding in River and Mercantile Group PLC.

The Directors are examining a number of other opportunities and have an active pipeline. Such opportunities include the acquisition of existing and new asset management businesses, as well as organically growing investment management capabilities through lateral hires and winning new contracts. As such, the Company will be operating in a regulated environment with the main framework for the regulation of asset management businesses being FSMA. FSMA regulates the provision of financial services, including investment services, in the UK through the concept of regulated activities, which may only be carried out by persons who hold appropriate authorisations. As part of the New Strategy, the Company has, pursuant to the terms of the Appointed Representative Agreement, become an appointed representative of Toscafund in accordance with section 39 of FSMA and the Appointed Representative Regulations. The Company will therefore be entitled (notwithstanding the fact that it is not itself regulated) to carry on specified regulated activities (as regulated by the FCA) as the appointed representative of Toscafund. Toscafund, as principal, accepts responsibility for the Company's conduct of such activities but only to the extent required by FSMA, the Appointed Representative Regulations and the rules of the FCA. Over time, it is the intention of the Board to apply for, or to acquire an entity that has (subject to the FCA rules on change of control), the necessary regulatory authorisations.

Trading update

With the exception of the settlement of litigation with Grant Thornton and the Tender Offer, as announced on 2 October 2020 and 2 December 2020 respectively, and the acquisitions of shares in River and Mercantile Group PLC, as described above, there has been no significant change in the financial position or financial performance of the Company since 30 September 2020, being the date to which the latest audited financial results of the Company were prepared.

During the period since 30 September 2020, the Company has continued to incur ongoing running costs broadly in line with the second half of the prior financial year. Following Readmission, the Company's cost base is expected to increase as the necessary elements to create an asset and wealth management platform are put in place.

Annual bonus and long term incentive plan

The Board wish to put in place the LTIP, which is designed to reward, incentivise and retain the Company's executive Directors and senior management to deliver sustainable growth for Shareholders. Under the LTIP, the Company will create a pool each year, equivalent to 20 per cent. of the growth in total shareholder value (including dividends), that is allocated to the executive Directors and senior management by the Remuneration Committee. The participants will receive one third of their allocation in cash at the end of the performance period, with the rest received in Ordinary Shares deferred over a five year period. The Board also believes that the LTIP will allow the Company to attract senior executive talent and that the key metric of total shareholder return is aligned with, and will support the growth in returns for, Shareholders.

Further details of the key terms of the LTIP are available in the Readmission Document. A Resolution is being put forward at the General Meeting for Shareholders to approve the terms of the LTIP and to authorise the Board to formalise the plan.

Related Party Transaction

The LTIP constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The independent Directors, being all Directors save for Martin Gilbert and Peter McKellar, consider, having consulted with the Company's Nominated Adviser, Arden, that the key terms of the LTIP are fair and reasonable insofar as the Company's Shareholders are concerned.  

New articles of association

At the General Meeting, the Company is proposing to adopt the Articles, a summary of which is set out in the Readmission Document.

Disapplication of pre-emption rights

At the General Meeting, the Board are proposing a special resolution to disapply statutory pre-emption rights in respect of an amount equal to 100% of the Existing Share Capital. The Board believes that the proposed disapplication will enable them to raise cash to execute the New Strategy of making strategic acquisitions and developing the business, while widening and strengthening the Company's shareholder base.

Notice of General Meeting and Readmission

A notice convening the General Meeting is set out in the Readmission Document. The General Meeting is to be held at 11.15 a.m. on 15 April 2021. In view of the COVID-19 pandemic and the measures that the UK Government has put in place restricting public gatherings, as well as for the safety of Directors, Shareholders and advisers, this Meeting will be a closed meeting. Application will be made to the London Stock Exchange for the Existing Ordinary Shares to be readmitted to trading on AIM. It is expected that Readmission will become effective and that dealings in the Existing Ordinary Shares will recommence on AIM at 8.00 a.m. on 16 April 2021.

Action to be taken

Given that the General Meeting will be a closed meeting, Shareholders are asked to complete, sign and return the Form of Proxy to the Registrar, Computershare Investor Services plc, The Pavilions, Bridgwater Road, Bristol, BS13 8AE as soon as possible and in any event not later than 11.15 a.m. on 13 April 2021.  

Recommendation

The Board consider that the Resolutions are fair and reasonable and in the best interests of all Shareholders and the Company as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed on a poll at the General Meeting, as the Directors, together with other Shareholders including Harwood Capital LLP, Harwood Capital Management (Gibraltar) Limited, funds managed by Toscafund and Cadoc Limited intend to do in respect of their beneficial holdings which amount, in aggregate, to 3,847,500 Existing Ordinary Shares, representing approximately 58.9 per cent. of the Existing Ordinary Shares.

IMPORTANT INFORMATION

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

Recipients of this announcement who are considering subscribing for or acquiring Ordinary Shares at a future point in time are reminded that any such acquisition or subscription must be made only on the basis of the information publicly disclosed. To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company, Arden Partners Plc ("Arden") or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with this announcement.  Arden does not accept any liability, whatsoever, for the accuracy of any information or opinions contained in this announcement or for the omission of any information from this announcement for which the Company and the directors are solely responsible.

Arden, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company in connection with the proposed Readmission and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Arden or advice to any other person in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit. Arden's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers and AIM Rules for Companies will be owed solely to the London Stock Exchange and not to the Company, to any of its directors or to any other person in respect of a decision to subscribe for or otherwise acquire Ordinary Shares in reliance on publicly available information. Arden has not authorised or approved the contents of, or any part of, this announcement and no representation or warranty, express or implied, is made by Arden or its affiliates as to any of its contents.

Neither this announcement nor any copy of it may be (i) taken or transmitted into, distributed, published, reproduced or otherwise made available, directly or indirectly, in the United States (within the meaning of Regulation S under the US Securities Act of 1933, as amended (the "US Securities Act")), (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Australia, Canada, New Zealand or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, or (iii) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such a solicitation or offer. Any failure to comply with these restrictions may constitute a violation of the securities laws or the other laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

The Ordinary Shares have not been and will not be registered under the US Securities Act, and may not be offered or sold in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. No public offering of securities is being made in the United States. Neither the US Securities and Exchange Commission nor any state securities commission or other regulatory authority in the United States has approved or disapproved of the Ordinary Shares or passed upon or endorsed the merits of the offering of the Ordinary Shares or the adequacy or accuracy of this announcement. Any representation to the contrary is a criminal offence in the United States.

No securities commission or similar authority in Canada has in any way passed on the merits of the securities offered hereunder and any representation to the contrary is an offence. No document in relation to the proposed placing of the Ordinary Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance. Accordingly, subject to certain exceptions, the Ordinary Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from any jurisdiction in which the same would be unlawful or offered or sold to a person within such a jurisdiction.

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Board's expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance. Though the Board believes these expectations to be reasonable at the date of this announcement, they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that the Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Offer. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Arden will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

 

END

 

 

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