Polar Capital Holdings plc ("Polar Capital"), the specialist active asset management group, today announces it has reached an agreement to acquire 100% of the issued share capital of Dalton Capital (Holdings) Limited, the parent company of Dalton Strategic Partnership LLP ("Dalton"), a UK based boutique asset manager with Assets under Management ("AuM") of £1.24bn as at 15 December 2020, from its shareholders (the "Acquisition" and the "Transaction"). This AuM figure excludes AuM in the Velox Fund which is on the Dalton platform but is not part of this transaction.
Dalton is a London based, independent, asset manager with a strong European equity capability and distribution reach. The firm's AuM, excluding the Velox Fund, comprises £1.12bn in the Melchior European Opportunities Fund and related segregated accounts, managed by David Robinson, together with £0.12bn of European long/short funds managed by Leonard Charlton and three smaller Global and Asian funds managed by Nick Mottram.
The Melchior European Opportunities Fund has a strong performance record since its inception in 2010 delivering top quartile performance within its Morningstar peer group over the last three and five years, and since inception, as at the end of November 2020.*
The Acquisition has a strong strategic rationale for Polar Capital with its growth and diversification strategy. It adds a leading European investment team which is complementary to Polar Capital's existing European Income team, with established funds, and a longstanding track record. It also provides Polar Capital with broader wholesale and institutional distribution into Europe, particularly in the German market. The Acquisition includes the existing Luxembourg SICAV umbrella which will aid Polar Capital's product range for international distribution.
The total consideration is based on the AuM at exchange and at current AuM will total circa £15.6m split between the initial consideration of £8.3m of which £7.8m will be paid in cash from Polar Capital's existing resources and £0.5m in Polar Capital shares and further deferred cash consideration in the region of £7.3m, payable 12 months after completion, with the amount being linked to the value of AuM at the time. While the deferred consideration will vary up or down with the level of AuM, the maximum deferred consideration payable is circa £13.2m, therefore the maximum payable under the transaction is circa £21.5m
The costs of the Transaction are expected to be £6.2m in total and will include £2.6m of termination costs (which will be incurred post completion and have been deducted in arriving at the circa £15.6m consideration) and £3.6m of reorganisation costs. The termination and reorganisation costs will be treated as exceptional items to be incurred in the financial years ending March 2021 and March 2022. Following the completion of the Transaction it is anticipated that the Acquisition will, on an adjusted diluted earnings per share basis, be immediately earnings enhancing.
The Acquisition is subject to FCA approval and is expected to complete in Q1 2021 with a transition of the DSP business onto the Polar Capital platform during Q2 2021.
Gavin Rochussen, CEO, Polar Capital said:
"The Acquisition of Dalton Strategic Partnership is further delivery of our growth and diversification strategy and is an excellent strategic, geographic and cultural fit with our existing business. It delivers greater scale, new capabilities and an expanded distribution reach in Europe, as well as highly experienced investment teams with a good track record. This acquisition will also provide Polar Capital with its first Luxembourg SICAV.
We are confident that the acquisition will be immediately earnings enhancing and look forward to welcoming the DSP team and clients to Polar."
Nick Mottram, CEO, Dalton said:
"We have long been impressed by Polar Capital's strong client focus, proposition and growth aspirations and are delighted to be joining the Group. It is a good cultural fit for us and that was important when we were looking to join a larger group, as we wanted to ensure we retained investment autonomy over our funds, something that our founding partner, Andrew Dalton, believed in fundamentally when he started the firm back in 2002.
The managers of our two key investment strategies, David Robinson and Leonard Charlton , are committed and enthusiastic about the Acquisition and the opportunity it will provide to further develop their investment propositions to the benefit of their investors.
We are confident that this is an excellent strategic fit for Dalton and look forward to growing a strong franchise within Polar Capital."
*Source: Morningstar as at 30 November 2020. The Melchior European Opportunities Fund is in the Morningstar Europe Flex-Cap Equity category.
For further information please contact:
+44 (0)20 7227 2700
Gavin Rochussen (Chief Executive)
John Mansell (Executive Director)
Samir Ayub (Finance Director)
Numis Securities Limited – Nomad and Joint Broker
+44 (0)20 7260 1000
Kevin Cruickshank (QE)
Peel Hunt LLP – Joint Broker
+44 (0)20 7418 8893
+44 (0)20 3757 4995