Crystallisation of Business Unit & Issue of Shares

Polar Capital Holdings PLC

12 November 2024

 

Polar Capital Holdings plc

12 November 2024

Crystallisation of Business Units and Issue of Shares

Polar Capital Holdings plc ("Polar Capital" or the "Company") announces the crystallisation of Preference Shares held by David Keetley, the lead manager of the Global Convertible Bond Fund.

These crystallisations are expected to be immediately earnings enhancing for shareholders. Based on the results for the financial year ended 31 March 2024, the combined impact of the crystallisation would have been an earnings enhancement of around 0.1p per share¹.

Background

As set out at the time of the Company's admission to AIM, Polar Capital has structured its fund management operations in such a way that the fund management teams are placed in separate business units.  Each business unit is a separate profit centre and the fund managers responsible receive each year a payment which comprises a share of their unit's core operating profit (operating profit before performance fees and related distributions) and performance fees.

In addition to the remuneration structure described above, certain fund managers and their teams are offered the prospect of an interest in the capital of the Company through the purchase of an individual class of preference shares in Polar Capital Partners Limited, a wholly owned subsidiary of the Company.  These preference shares have been structured in such a way as to become convertible upon the occurrence of certain events, known as crystallisation events, into cash or, at the option of the Company, ordinary shares at a ratio that is intended to be earnings enhancing for the Group.  At the election of the holders of the preference shares, they may crystallise all or part of their preference shares, or retain the balance, if any, for a further crystallising event at a subsequent date.  

From the effective date of crystallisation, the fund managers concerned cease to be eligible to receive their share (or the relevant proportion in the case of a partial crystallisation) of the business unit's core operating profit which has been crystallised and simultaneously going forward will receive a reduced interest in their performance fees.

Global Convertible Bond Fund unit

Mr David Keetley has elected to crystallise the remaining one-third of his preference shares in relation to this Fund.

Under the terms of the preference shares the crystallisation value is calculated as at 31 March 2024 and either satisfied in cash, or at the option of the Company, by issue of new ordinary shares. The Company has elected to satisfy the consideration for both crystallisations by the issue of new ordinary shares.

The crystallisations are in relation to the crystallisation period ended 31 March 2024. The initial crystallisation value in respect of the partial crystallisation of the Global Convertible Fund unit is to be satisfied by the issue of up to 114,716 new ordinary shares. The new ordinary shares will be issued in tranches as described below.

The crystallisation value is re-calculated at each of the first, second, and third anniversaries of 31 March 2024, based on the profits of the business unit in the 12 months ended on the respective anniversary. If the result of the re-calculation provides for a smaller cash or share consideration, then the amounts paid or shares issued to the owners of the preference shares are adjusted accordingly. The effect of such re-calculation is to adjust downwards any consideration and there can never be an increase in the crystallisation value. In return for this delivery of new ordinary shares, the Convertible bond team will be forfeiting their interests (or the relevant proportion in the case of a partial crystallisation) in their core operating profit in relation to the Polar Global Convertible Bond Fund for the financial year ended 31 March 2024.

Under the terms of the preference shares 10 percent of the new ordinary shares are issued immediately with the balance of 30 percent of the new ordinary shares due (subject to the re-calculation described above) on or as soon as practicable after each crystallisation anniversary.

As a result, the Company will issue a total of 11,471 (the initial 10%) new ordinary shares in respect of this crystallisation.  The new ordinary shares will rank pari passu with the Company's existing ordinary shares at the time of issue.

The Company's current issued share capital is 101,548,934 ordinary shares and following admission of the new ordinary shares the total ordinary shares in issue will be 101,560,405.

^{Note 1} Presented for illustrative purposes based on the year end results for 31 March 2024 and assuming the crystallisation occurred as at 31 March 2024.

For further information please contact:

Polar Capital                                                                      [phone]

Gavin Rochussen (Chief Executive)

Samir Ayub           (Chief Financial Officer)

Numis Securities Limited - Nomad and Joint Broker     [phone]

Giles Rolls (QE)

Charles Farquhar

Peel Hunt LLP - Joint Broker                                            [phone]

Andrew Buchanan

Oliver Jackson

Camarco                                                                             [phone]

Ed Gascoigne-Pees

Jennifer Renwick

Phoebe Pugh  

 

END