B.P. Marsh & Partners PLC
Date: 8th July 2013
On behalf of: B.P. Marsh & Partners Plc ("the Company", "the Group" or "B.P. Marsh")
B.P. Marsh & Partners Plc
Completion of Partial Disposal of Investment in Hyperion and strategy update
· £29.2m cash consideration for disposal of 80% of holding
· Retention of 2.76% stake
· Repayment/cancellation of £4.325m Directors' Loan facility
· Dividend of 1.25p per share declared
Partial Disposal of shareholding in Hyperion Insurance Group Limited ("Hyperion")
B.P. Marsh & Partners Plc, (AIM: BPM), a niche venture capital provider to early stage financial services businesses, is pleased to announce that the transaction to sell 80% of its holding (5,623,520 shares) in Hyperion to the global growth equity firm General Atlantic Hawthorn B.V. ("General Atlantic") has now completed following receipt of FCA approval, competition clearance in Germany and regulatory clearance in Texas, Spain and Singapore. The cash consideration of £29,242,304 (equating to £5.20 per A Ordinary Share of Hyperion) has been received.
The Company will retain a 2.76% stake in Hyperion subject to a Call Option arrangement which will allow General Atlantic to purchase the Company's remaining stake of 1,405,880 A Ordinary Shares of Hyperion at £5.20 per share. The Call Option will expire and fall away on 8th July 2016 or upon Hyperion undertaking an Initial Public Offering ("IPO"), whichever is the earlier. Under the Call Option the Group could receive a further £7,310,576 in cash if exercised.
As a leading niche provider of capital to early stage financial service companies, B.P. Marsh was instrumental in co-founding and funding Hyperion in 1994, with an initial equity investment of £25,000 and a further equity investment of £4,320,403 over the subsequent 18 years. Since then, B.P. Marsh has overseen Hyperion's growth through a longstanding partnership and provision of working capital finance, to which the Board of B.P. Marsh has been committed, including spearheading the Strategic Finance Committee which led to 3i joining as a fellow investor in 2008. Since inception Hyperion has grown from five staff based in London to over 1,400 staff in 28 countries producing over £110m in revenues for the financial year ending 30th September 2012. 3i has also sold its stake in Hyperion to General Atlantic, at the same price per share.
The investment and subsequent majority disposal of the Hyperion stake is another example of B.P. Marsh's successful strategy and business model, and demonstrates how the Company proactively helps investments mature for the benefit of both the underlying Company and the B.P. Marsh shareholders.
The Share Purchase Agreement includes an anti-embarrassment provision, which provides that if Hyperion undertakes an IPO by 8th July 2014, at a price at or in excess of £6.25 per A Ordinary Share, there will be an additional adjustment amount payable to the Group, up to a maximum of £0.30 per A Ordinary Share. This provision could result in a maximum additional amount of £2,108,820 in consideration becoming payable to the Group; however Hyperion's value would need to have increased to £6.60 per A Ordinary Share, or above, within the following 12 months and the right market conditions would need to be in place for a successful IPO, for this maximum additional consideration to become payable.
The Group has agreed to provide to Hyperion a loan of £6,037,360 at an interest rate of Bank of England Base rate + 5%, minimum 7.5% for a minimum term of 12 months to refinance existing shareholder loans (including £2,945,947 that B.P. Marsh had previously provided to Hyperion). As such £3,091,413 in cash from the sale of shares will be used to finance this loan. The loan will be repayable on an IPO or a change of control of Hyperion or 3rd October 2017, whichever is the earlier.
The Board believes that now is the right time for a larger investor to take Hyperion forward to the next stage of its development and has therefore taken this opportunity to divest 80% of its stake in Hyperion. It has given the sale of this stake extensive consideration and was unanimous in this decision. The Board realises that if this course of action had not been taken, the Group would have seen regular and material dilution of its shareholding, as Hyperion continue to take advantage of acquisition opportunities.
Strategy
The Group has a stated objective which is to make minority investments in promising opportunities in the financial services sector, typically taking an equity stake of between 15% and 45%. The investment goal remains unchanged: identify businesses with strong management teams and good growth potential, and help fund, support and develop these companies so they can deliver on growth opportunities.
Given the potential opportunities in the Group's key market place, the Board is unanimous that the priority for the Group and the long term benefit of the shareholders is to continue to develop the business, and reinvest the Hyperion sale proceeds in both its existing portfolio and in new ventures within its existing investment criteria, as has been its philosophy since 1994.
Hyperion is a good example of how the B.P. Marsh model creates value on an NAV level for shareholders, and it should also be noted that the Group has consistently generated increased value in its investments, achieving a compound growth rate of circa 12% in its net assets since formation. Management is confident that the stated strategy will result in the continuation of such growth.
As a sign of confidence in the long term prospects for B.P. Marsh, the Board intends to recommend the payment of a dividend of 1.25p per share (£365,375), a 25% increase from the last dividend paid by the Company in July 2012.
Comment from Brian Marsh OBE:
"We have been pleased to work alongside Hyperion over the last 18 years, where we have helped build the company to the successful position it stands in today. The B.P. Marsh investment model continues to create demonstrable long term value to shareholders, and we are confident the strategy will continue to find, develop and realise more opportunities going forward."
£4.325m Directors' Loan Facility
Following receipt of approximately £20m, net of tax and loans, the Company can confirm that the Directors' Loan facility will be fully repaid and cancelled.
Annual General Meeting
As announced on 18th June 2013 the Company will be holding its AGM on 18th July 2013.
Enquiries to:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
Brian Marsh OBE +44 (0)20 7233 3112
Nominated Adviser & Broker
Panmure Gordon
Hugh Morgan, Fred Walsh +44 (0)20 7886 2500
PR Adviser [email protected]
Redleaf Polhill +44 (0) 20 7382 4747
Emma Kane
Notes to Editors:
About B.P. Marsh & Partners Plc
B.P. Marsh's current portfolio contains ten companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk.
Since formation over 20 years ago, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Many of the directors have worked with each other in previous roles, and all have worked with each other for at least four years.
Prior to Brian Marsh's involvement in the Company, he spent many years in insurance broking and underwriting in Lloyd's as well as the London and overseas market. He has over 30 years' experience in building, buying and selling financial services businesses, particularly in the insurance sector.
Jonathan Newman is a Chartered Management Accountant and is the Group Director of Finance and has over 15 years' experience in the financial services industry. Jonathan advises investee companies through three non-executive board appointments and evaluates new investment opportunities.
Daniel Topping is a Member of the Chartered Institute of Securities and Investment (MCSI) and an Associate of the Institute of Chartered Secretaries and Administrators (ACIS), having graduated from the University of Durham in 2005. Dan joined B.P. Marsh in February 2007 having started his career at an accountancy firm. In 2011 he was appointed as a director of B.P. Marsh and currently has a number of non-executive appointments over five investee companies and evaluates new investment opportunities.
Camilla Kenyon was appointed as Head of Investor Relations at B.P. Marsh in February 2009, having four years' prior experience with the Company. Camilla holds two non-executive appointments, is Chair of the New Business Committee and is a Member of the Investor Relations Society.
Natasha Dunbar has over 18 years' experience in the financial services industry. Having joined the Company in 1994 she was made managing director in March 2002, subsequently becoming a non-executive director of the Company in 2008, a position she held for five years. Natasha was reappointed as a Director in February 2013 and holds a non-executive appointment on the board of one of the Group's investee companies.
