15th Mar 2016 09:58
LONDON (Alliance News) - London-listed outsourcer Sanne Group PLC on Tuesday said it agreed to acquire South Africa-based IDS Fund Services, which provides outsourced investment administration services to hedge funds, for up to ZAR300 million, equivalent to about GBP13.6 million.
IDS was established in 2002 and employs 140 people in offices in Cape Town in South Africa and also in Malta. It administers structures and funds with assets in excess of ZAR80 billion, Sanne said, with the acquisition expected to provide an immediate boost to earnings. The newly acquired company provides services such as calculating net asset values, fund accounting, investor services, and transaction and cash management.
Led by Ian Hamilton, founder and chief executive officer, IDS is expected to report earnings before interest, tax, depreciation and amortisation of about ZAR32.5 million for its financial year ended February 29, up from ZAR24.2 million year on year.
Sanne expects South Africa's hedge fund sector to become increasingly institutionalised, citing new regulations it said will increase oversight and reporting requirements for funds and result in further outsourcing opportunities. The acquisition of IDS complements Sanne's existing alternative asset specialisms in private equity, real estate and debt, according to Chief Executive Officer Dean Godwin.
"The acquisition of IDS is consistent with Sanne's strategy of expanding the group's asset class capabilities and delivering greater jurisdictional diversification," Godwin said in a statement.
Sanne will pay an initial ZAR201.6 million in cash for IDS, with a deferred cash payment of ZAR74.7 million depending on IDS final audited Ebitda for its recently ended financial year. The company therefore expects to pay a total of ZAR276.3 million. The price tag for IDS cannot exceed ZAR300.0 million, Sanne said.
Sanne will report annual results for 2015 on Monday March 21.
Shares in Sanne were untraded at 354.25 pence on Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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