TEAM plc (LON:TEAM), the wealth, asset management and complementary financial services group, has announced that it has conditionally agreed to acquire the entire issued and to be issued share capital of Concentric Group Limited Concentric is a Jersey based financial planning and investment consultancy business, delivering market-leading investment performance and analysis for high net worth individuals and institutional investors in Jersey and internationally.
An initial consideration of £1.7 million is payable in cash, plus further deferred consideration of up to £0.8 million in new shares in TEAM. The Acquisition is subject to approval by the Jersey Financial Services Commission. The cash consideration will be funded through a £ 2.65 million (gross) subscription from existing and new investors in TEAM.
Hannam & Partners is acting as financial adviser to the Company and Canaccord Genuity Limited is acting as nominated adviser and broker to the Company in relation to the Acquisition and Subscription.
Concentric – overview
· Concentric is a successful Jersey-based investment consultancy business providing investment advice and analysis to over 430 retail, HNWI and institutional investors, with assets under advice of £231 million (as at 31 December 2021).
· In the 12 months to 31 December 2021, Concentric generated unaudited revenues of £1.0 million (FY20 audited: £0.8m) and adjusted EBITDA of £0.22 million, profit before tax of £0.1 million (FY20 audited: £0.1m) and had net assets of £0.5 million (FY20 audited: £0.5m).
Acquisition Rationale
· Concentric has an entrepreneurial management team who are well known to TEAM and the Acquisition will facilitate a natural step up in the existing working relationships between the two businesses.
· In addition:
o Potential cost and revenue synergies have been identified by the Directors;
o Opportunity to offer Concentric services to current and future TEAM Asset Management clients, and vice versa; and
o Scope to develop Concentric’s distribution capabilities into overseas markets for HNWI clients and fiduciaries.
· On completion of the Acquisition, which is subject to regulatory approval, the directors currently expect TEAM to have assets under management and advice of approximately £550 million, with approximately £1.4 billion of cash under advice.
· The Acquisition is the fourth transaction the Company has made since inception in January 2020, following on from:
o January 2020 – Theta (now called TEAM Asset Management), Jersey based, investment management;
o July 2021 – JCAP, Jersey based, cash management services; and
o December 2021 – Omega, Jersey based, IFA consultancy (awaiting regulatory approval).
· The Acquisition is expected to complete in Autumn 2022.
Trading Update
· TEAM is delivering on its strategy to act as a consolidator in the highly fragmented wealth and asset management market.
· As at 31 March 2022 AUM stood at £231 million with a further £1.4 billion of cash under advice
· Unaudited revenues for the six months ended 31 March 2022 were £1.0 million (H1 2020: £0.6 million) and the adjusted EBITDA loss was £0.4 million (H1 2021: £0.4 million). Cash as at 31 March 2022 was £3.0 million.
· Strong pipeline of potential senior hires including both individuals and established teams, at varying stages in the process of joining the Group.
· Awaiting regulatory approval to complete the Omega acquisition.
· Completion of the acquisition of Concentric and similar transactions in the pipeline makes TEAM well placed to continue to achieve its goal of creating a leading wealth, asset management and complementary financial services group.
Subscription
· The Company has undertaken the Subscription to part fund the Acquisition at a subscription price of 60 pence. The Subscription Price represents a discount of 5.5 per cent. to the closing mid-market price for an ordinary share of 63.5 pence on 11 May 2022, being the last practicable date prior to this announcement.
· The Subscription has been undertaken using the existing share authorities of the Company granted at the Company AGM in May 2021.
· The Company has had commitments from the Subscribers who will enter into subscription letters relating to the Subscription pursuant to which the Subscribers shall subscribe for, in aggregate 4,416,667 ordinary shares. The Subscription will raise £2.65 million (gross) and £2.53 million (net).
· If the Acquisition does not complete, the Company, pursuant to the terms of the subscription letters, will retain the proceeds of the Subscription for general corporate purposes and to provide liquidity for future acquisition opportunities that may arise.
Admission and Settlement
· The issue of the Subscription Shares will be made on a non pre-emptive basis.
· Application has been made to the London Stock Exchange for the 4,416,667 Subscription Shares being issued to be admitted to trading on AIM. Admission of the Subscription Shares is expected to become effective on or around 8.00 a.m. on 17 May 2022 (or such later date as the Company and the Subscribers may agree, being no later than 31 May 2022).
· The Subscription Shares, when issued, will rank pari passu in all respects with the existing Ordinary Shares in issue and therefore will rank equally for all dividends or other distributions declared, made or paid after Admission.
· Following Admission, taking account of the above issue, the Company’s issued share capital will comprise 21,976,145 ordinary shares. From Admission, the figure of 21,976,145 may be used by Shareholders as the denominator for calculations to determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Disclosure Guidance and Transparency Rules.
Director Participation in the Subscription
As part of the Subscription, Mark Clubb (Executive Chairman) intends to subscribe for 251,318 Subscription Shares at the Subscription Price. Following Mr Clu bb’s Subscription he will be interested in 3,703,818 Ordinary Shares, representing 16.9 per cent of the issued share capital as enlarged by the Subscription.
Further, Mr Philip Taylor, David Turnbull and Michael Gray (Non-Executive Directors) also intend to subscribe for 16,600 Subscription Shares, 16,600 Subscription Shares and 25,000 Subscription Shares respectively. Following these subscriptions Mr Philip Taylor, David Turnbull and Michael Gray will be interested in 33,645 Ordinary Shares, 33,645 Ordinary Shares and 47,727 Ordinary Shares respectively, representing 0.15 per cent, 0.15 per cent. and 0.22 per cent of the issued share capital as enlarged by the Subscription.
Matthew Moore, CFO, commented:
“Concentric is led by an experienced, ambitious team who have built a good business, growing the client base, services and staff, revenues and EBITDA in a challenging market. We are delighted they see the transaction as a stepping stone to achieve their own goals, by being part of a larger, wealth management business, with shared values and the ability to offer clients a broader range of investment advice services.
Core to Concentrics’s investment approach is to focus on modern quantitative and qualitative analysis, with an emphasis on impact, ESG and sustainable development goals investing. These are values shared with TEAM and a basis for significantly expanding Concentric’s customer base by targeting the aspirations of the upcoming generation of investors in Jersey, the UK and internationally.”
Management Incentive Plan
As set out in the admission document of the Company, dated 2 March 2021, the Company set up the TEAM plc Management Incentive Plan in order to ensure employees of the Company are well motivated and identify closely with the success of the Group. The Company’s remuneration committee committed to make decisions about participation, size and timing of awards following the IPO of the Company.
Following consultation with major shareholders, the Remuneration Committee has agreed to proceed with grants under the MIP, but with amended participation, size and timing from that set out at the IPO. In summary the grants will be as follows:
– The performance criteria under the MIP, as set out in the Admission Document, were based around the share price performance of the Company being at least 100 per cent. above the IPO price of the Company, being the base price. The Remuneration Committee have re-set the base price to the Subscription Price.
– One-third of the MIP will be set with reference to the TEAM plc share price, with full pay out where the share price is twice the Subscription Price.
– Two-thirds of the scheme will be set with reference to the TEAM plc market capitalisation, with full pay out where the market capitalisation is equal to or exceeds £40 million.
– A hold period of 12 months is required for any Ordinary Shares issued under the MIP. Previously, there were no hold periods under the MIP.
– As a result of the lowering of the MIP base price, Mark Clubb has decided not to remain a participant in the MIP, in order to remain fully aligned with TEAM’s IPO investors. Mark Clubb will continue to be incentivised by his 16.9 per cent (post Subscription) interest in TEAM.
– Previously, it had been proposed Mark Clubb would be granted 4.0 per cent. of the proposed 12.5 per cent. set aside under the MIP. The maximum dilution under the MIP has therefore been reduced from 12.5 per cent to 8.5 per cent.
The amendment to the MIP constitutes a related party transaction, due to the revision of the terms. The independent directors of the Company (being all the directors, excluding Matthew Moore), having consulted with Canaccord in its capacity as the Company’s nominated adviser for the purposes of the AIM Rules, consider the revision of the terms of the MIP, set out above, to be fair and reasonable insofar as the Company’s shareholders are concerned.
A further announcement will be made shortly, including details of who is participating in the MIP, detailing the grants to be made by the Remuneration Committee.
