29th Jan 2008 07:16
Jelf Group PLC29 January 2008 29 January 2008 JELF GROUP PLC ("Jelf" or the "Company") ACQUISITIONS AND PLACING ACQUISITIONS OF MANSON INSURANCE GROUP LIMITED, BARTLETT, DAVIES BICKS LIMITED AND CARTER & CO RISK MANAGEMENT LIMITED AND PROPOSED PLACING AND SUBSCRIPTION TO RAISE APPROXIMATELY £47.0 MILLION Jelf Group plc, an independent full-service brokerage that supports businessesand related individuals, is pleased to announce the acquisitions of the entireissued share capital of Manson Insurance Group Limited ("Manson"), BartlettDavies Bicks Limited ("BDB") and Carter & Co. Risk Management Limited ("CRM"), asignificantly oversubscribed conditional placing to raise £21.0 million (beforeexpenses) and a conditional subscription by 3i Quoted Private Equity Limited ("QPE") to raise £26.0 million (before expenses). HIGHLIGHTS Three strategic acquisitions • Acquisition of Manson, a Manchester-based general insurance, healthcare and financial services broker. This represents Jelf's first acquisition outside Southern England and South Wales and will act as a hub for further organic and acquisition-based growth. The acquisition of Manson will be satisfied by an initial consideration of £16.2 million, paid in cash and shares, and will bring gross written premium ("GWP") (in both insurance and healthcare) of approximately £43 million and a strong strategic presence in the North West of England • Acquisition of BDB and CRM in Devon, two general insurance brokerages, for an estimated total consideration of £2.9 million in cash and shares. Together they will contribute additional GWP of approximately £6 million. These businesses will be incorporated within existing Jelf operations in Devon to give scale and critical mass • The acquisitions increase Jelf's insurance GWP to around £174 million (from approximately £150 million) and healthcare GWP to around £150 million Proposed institutional placing and subscription to raise £47.0 million (beforeexpenses) o The proceeds of the placing and subscription will allow Jelf tocapitalise on future acquisition opportunities, to fund future investments and,where appropriate, to reduce bank indebtedness. o Proposed subscription of £26 million from QPE, a public closed-endinvestment company and new investor in Jelf o QPE will, on completion, have a 24.6 per cent. holding in Jelf. BruceCarnegie-Brown, Managing Partner of 3i Investments plc (the investment adviserof QPE) will, on completion of the Subscription, be appointed to the Board Alex Alway, group chief executive of Jelf, said: "This series of transactions represents a significant further development forJelf. We have made three attractive acquisitions and extended our reach intothe North West of England, enhancing our position as one of the leadingindependents in a shrinking regional insurance broking sector. "Despite market conditions the fundraising was significantly oversubscribed andbrings us a large number of new institutional shareholders. The support we havereceived from new and existing investors is a positive endorsement of ourstrategy. We are delighted to welcome 3i Quoted Private Equity Limited as aninvestor and look forward to their valuable support and the experience theybring to the Company. We look forward to the next phase of Jelf's growth withconfidence." For further information: Jelf Group Tel: 01454 272 713 Alex Alway, group chief executive Pelham PR Tel: 0207 743 6362 Polly Fergusson, Damian Beeley Cenkos Securities plc Tel: 020 7397 8900 Ian Soanes website: www.Jelfgroup.com JELF GROUP PLC ("Jelf" or the "Company") ACQUISITIONS OF MANSON INSURANCE GROUP LIMITED, BARTLETT, DAVIES BICKS LIMITED AND CARTER & CO RISK MANAGEMENT LIMITED AND PROPOSED PLACING AND SUBSCRIPTION TO RAISE £47.0 MILLION Introduction The Jelf Group is an established corporate intermediary with operationsprimarily in Southern England and South Wales offering a range of financialservices to corporate clients, principally in the areas of general insurance,healthcare, employee benefits, wealth management and commercial finance. The Board is pleased to announce that the Company has acquired the entire issuedshare capital of Manson, BDB and CRM and proposes to raise £47.0 million beforeexpenses, by way of a placing of 9,882,354 new Ordinary Shares and thesubscription by QPE for 12,235,294 new Ordinary Shares. The Board consider thatthis fundraising represents another significant step in the Company'sdevelopment. It enables the Company not only to fund the acquisitions of Manson,BDB and CRM but also to capitalise on acquisition opportunities that theDirectors expect to arise in the coming months. Jelf is actively pursuing a policy of growth, both organically and through thetargeted acquisition of strong, profitable insurance and healthcare brokers.The Board expects the current trend of consolidation in the industry to continueand plans to use a proportion of the funds raised by the Placing and theSubscription to acquire further insurance and healthcare broking businesses, tofund future investments and, where appropriate, to reduce bank indebtedness. Gross written premium ("GWP") is the premium placed with insurers on behalf ofclients and is a key factor in negotiating commission rates from insurers wherescale is an important factor. These three acquisitions take Jelf's insurance GWPto around £174 million (from approximately £150 million) and Jelf's healthcareGWP to around £150 million thereby consolidating its position as a leadingindependent intermediary in the UK. Manson On 28 January 2008, the Company acquired the entire issued share capital ofManson, a Manchester-based general insurance, healthcare and financial servicesbroker. Besides adding significant premium income in Jelf's core generalinsurance (2007: gross written premium of approximately £18 million) andhealthcare markets (2007: gross written premium of approximately £25 million),the Board believes that the Manson Acquisition will also help the Group toachieve a strong strategic presence in the north west of England. This marks theGroup's first acquisition outside Southern England and will act as a hub forfurther acquisitions and organic growth in the North West. In the year ended 31December 2007 Manson made a profit before tax of £0.3 million. Initial consideration of £16.2 million, comprising £15.3 million in respect ofthe business of Manson and £0.9 million in respect of its estimated net assets,was paid at completion. This initial consideration was satisfied by a paymentof £12.2 million in cash and £4.0 million by the allotment (conditional upontheir admission to trading on AIM) of 1,681,220 new Ordinary Shares at an issueprice of 240.5 pence per share. The payment in respect of Manson's net assets issubject to adjustment by reference to completion accounts. Further consideration, which is not subject to a maximum limitation but which isestimated at £2.5 million may be payable in cash if, within 24 months followingcompletion of the acquisition, certain turnover targets are exceeded. Failureto meet certain turnover targets within the 12 months following completion ofthe acquisition will result in a clawback of the consideration up to a maximumof £4.5 million. The vendors of Manson are incentivised to cross-sell Jelfservices to new and existing Manson clients in the period of 24 months followingcompletion of the acquisition, by way of commission share arrangements. Jon Manson will be joining the board of Jelf Group plc on completion of thetransaction as an executive director. He will also retain his position aschairman of Manson Insurance Group Limited. His employment is subject to sixmonths notice by either the Company or Mr Manson save that the earliest datethat the agreement could be terminated by either the Company or Mr Manson is 27January 2010. His basic salary is £230,215 per annum without review until after27 January 2010. There is no bonus scheme participation until after 27 January2010 when he may be invited to participate in a Jelf Group bonus scheme. MrManson will be entitled to participate in pension and other insurance plans. BDB and CRM BDB and CRM are general insurance brokers providing services to SME corporateand personal clients, based near Newton Abbott in Devon where Jelf already hasan office. The BDB and CRM acquisitions will contribute an additional grosswritten premium of around £6 million to Jelf, in aggregate, and will provide theGroup with critical mass in this area. Both acquisitions will be integratedoperationally with Jelf. On 28 January 2008 the Company entered into two separate agreements to acquirethe entire issued share capital of BDB for an estimated total consideration of£1.56 million and to acquire the entire issued share capital of CRM for anestimated total consideration of £1.31 million. The initial consideration for the BDB Acquisition was £0.94 million, paid atcompletion, of which £0.63 million was paid in cash, and £0.31 million wassatisfied by the allotment (conditional upon their admission to trading on AIM)of 133,319 new Ordinary Shares in Jelf at an issue price of 234.7 pence pershare. Deferred consideration, estimated at £0.62 million may be payable in cashif, within 24 months following completion of the acquisition certain turnovertargets are achieved. The initial consideration for the CRM Acquisition was £0.78 million, paid atcompletion, of which £0.52 million was paid in cash, and £0.26 million wassatisfied by the allotment (conditional upon their admission to trading on AIM)of 111,307 new Ordinary Shares in Jelf at an issue price of 234.7 pence pershare. Deferred consideration, estimated at £0.52 million may be payable in cashif within 24 months following completion of the acquisition certain turnovertargets, are achieved. The Placing The Company is proposing to raise £21.0 million (approximately £20.1 millionafter expenses) by way of a placing to institutional investors, through theissue of 9,882,354 new Ordinary Shares at a price of 212.5 pence per PlacingShare. Cenkos and the Company have, today, entered into the Placing Agreementpursuant to which Cenkos, as agent to the Company, will use its reasonableendeavours to procure subscribers for the Placing Shares. The Placing isconditional, inter alia, on the passing of Resolutions 1 and 2 as set out in theNotice of General Meeting. The Placing is not underwritten. The Placing Shares will rank pari passu in all respects with the ExistingOrdinary Shares, including the right to receive all dividends and otherdistributions thereafter declared, made or paid relating to a record date afterAdmission. The obligations of Cenkos under the Placing Agreement may beterminated in certain circumstances prior to Admission. The Company has agreedto pay all costs, charges and expenses connected with the Placing, including alllegal, accounting and other professional fees and expenses and all related VAT. Subscription Agreement with QPE The Company and QPE have, today, entered into a subscription agreement pursuantto which QPE has conditionally agreed to subscribe for 12,235,294 new OrdinaryShares at a price of 212.5 pence per share to raise a total of £26.0 million(approximately £25.0 million after expenses). On Admission, QPE is expected tohold approximately 24.6 per cent. of the Enlarged Share Capital. TheSubscription is conditional, inter alia, on the passing of Resolutions 1 and 2as set out in the Notice of General Meeting. The Subscription Shares will rank in full for all dividends and otherdistributions declared, made or paid with a record date after Admission andotherwise pari passu in all respects with the Existing Ordinary Shares. TheCompany has given certain warranties and undertakings to QPE under theSubscription Agreement. The obligations of QPE under the Subscription Agreementmay be terminated by QPE prior to Admission in certain circumstances, includingthe occurrence of an event of force majeure. In addition, the Company has agreedto pay QPE upon completion commission based on the value of the SubscriptionShares at the Placing Price and upon completion, or termination of theagreement, should the Company not pass the Resolutions at the General Meeting,legal, accounting and other professional fees and expenses related to theSubscription. Information on QPE QPE is a listed, Jersey-incorporated, public closed-end investment company whoseshares are listed on the Official List and admitted to trading on London StockExchange plc's main market for listed securities. The strategy of QPE is toinvest in companies where it can introduce private equity techniques andmethodologies to listed companies. As such, QPE is keen for independentshareholders of the companies in which it invests to continue to hold shares andparticipate in those companies and share in the future growth in capital value.3i Group plc and its connected persons own approximately 49.5 per cent. of QPE.QPE's investment adviser is 3i Investments plc ("3i"), a wholly-owned subsidiaryof 3i Group plc. QPE raised approximately £400 million on its initial listing onthe Official List in June 2007. It is expected that the Subscription will provide the Company with access to thestrategic, operational and financial advice and support available from QPE andits investment adviser, 3i. QPE's investment adviser comprises a dedicated andexperienced team with strong complementary skills and years of operational andtransactional experience. Furthermore, they have a deep understanding of anumber of sectors, including the insurance broking, wealth management andgeneral financial services sectors, supported by their access to the 3i group'swider network and resources. At the invitation of the Company, QPE and its investment adviser are expected toassist the Company in developing its future strategy and business plans andadvise the Company on implementing that strategy using their industry knowledge,operational experience and network. In addition, QPE will have certain rightsto nominate a director to be appointed to the Board. General Meeting A general meeting of the Company has been convened for 10:30 a.m. 25 February2008 to consider resolutions to approve the Placing and the Subscription. Acircular containing notice of the General Meeting will be posted to shareholderstoday. If the Resolutions to be proposed at the General Meeting are passed, followingAdmission, the Company's authorised and issued share capital will be 100,000,000shares and 49,787,906 shares respectively. Timetable Application has been made for the Manson Consideration Shares, the BDBConsideration Shares and the CRM Consideration Shares to be admitted to tradingon AIM and admission is expected to occur on 1 February 2008. Application willbe made for the Placing Shares and the Subscription Shares to be admitted totrading on AIM and Admission is expected to occur on 26 February 2008 Definitions "3i" 3i Investments plc, QPE's investment adviser, a subsidiary of 3i Group plc "Acquisitions" the Manson Acquisition, the BDB Acquisition and the CRM Acquisition "Admission" the admission of the Placing Shares and the Subscription Shares (as the case may be) to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM market operated by the London Stock Exchange "AIM Rules" the AIM rules of the Companies published by the London Stock Exchange "BDB" Bartlett Davies Bicks Limited, a company registered in England under company number 04351054 "BDB Acquisition" the acquisition of the entire issued share capital of BDB "BDB Consideration" the consideration for the BDB Acquisition "BDB Consideration Shares" the 133,319 Ordinary Shares issued to the vendors of BDB on completion of the BDB Acquisition, in satisfaction of part of the BDB Consideration "Board" or "Directors" the board of directors of the Company "CRM" Carter & Co. Risk Management Limited, a company registered in England under company number 04682510 "CRM Acquisition" the acquisition of the entire issued share capital of CRM "CRM Consideration" the consideration for the CRM Acquisition "CRM Consideration Shares" the 111,307 Ordinary Shares issued to the vendors of CRM on completion of the CRM Acquisition, in satisfaction of part of the CRM Consideration "Cenkos" Cenkos Securities plc, the nominated adviser and broker to the Company "Consideration Shares" the Manson Consideration Shares, the BDB Consideration Shares and the CRM Consideration Shares "Enlarged Share Capital" the issued share capital of the Company following Admission, as enlarged by the issue of the Placing Shares, the Subscription Shares and including the Consideration Shares "Existing Ordinary Shares" the 27,670,258 existing Ordinary Shares in issue at the date of this announcement (including for this purpose the Consideration Shares) "FSA" Financial Services Authority "FSMA" the Financial Services and Markets Act 2000 (as amended) including any revisions made pursuant thereto at the date of this announcement "General Meeting" the general meeting of the Company convened for 10:30 a.m. on 25 February 2008 (or any adjournment thereof) "Group" the Company and its subsidiaries "Jelf" or the "Company" Jelf Group plc "London Stock Exchange" London Stock Exchange plc "Manson Acquisition" the acquisition of the entire share capital of Manson "Manson" Manson Insurance Group Limited, a company incorporated in England under company number 02748026 "Manson Consideration" the consideration for the Manson Acquisition "Manson Consideration Shares" the 1,681,220 Ordinary Shares issued to the vendors of Manson on completion of the Manson Acquisition, in satisfaction of part of the Manson Consideration "Notice of General Meeting" the notice of the General Meeting set out at the end of the circular to be sent to shareholders "Official List" the official list of the UK Listing Authority "Ordinary Shares" ordinary shares of 1 penny each in the capital of the Company "Placees" subscribers for Placing Shares "Placing" the proposed conditional placing by Cenkos, on behalf of Jelf, of the Placing Shares at the Placing Price to certain institutional investors, pursuant to the terms of the Placing Agreement "Placing Agreement" the conditional placing agreement dated 29 January 2008 between Cenkos (1) and the Company (2) relating to the Placing, details of which are set out at paragraph 9 of the Letter from the Chairman of Jelf, set out in this document "Placing Price" 212.5 pence per Placing Share or Subscription Share as the case may be "Placing Shares" the 9,882,354 new Ordinary Shares which are intended to be issued pursuant to the Placing "QPE" 3i Quoted Private Equity Limited, a company incorporated in Jersey under company number 96272 "Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting "Shareholders" holders of Ordinary Shares "Subscription" the subscription by QPE for the Subscription Shares at the Placing Price pursuant to the Subscription Agreement "Subscription Agreement" the subscription agreement dated 29 January 2008 between QPE and the Company relating to the Subscription, details of which are set out at paragraph 10 of the Letter from the Chairman of Jelf, set out in this document "Subscription Shares" the 12,235,294 new Ordinary Shares which are intended to be issued pursuant to the Subscription "UK Listing Authority" the Financial Services Authority acting in its capacity as the competent authority for the purposes of FSMA. Notes to editors Jelf was founded by Chris Jelf in 1989. Today, Jelf operates from over 20locations primarily in the Southern England and South Wales and offers anextensive range of corporate services, insurance, healthcare, employee benefits,commercial finance and wealth management services to businesses and individuals. Jelf advises over 20,000 corporate clients across a range of disciplines. Theseclients cover the spectrum from significant public companies to smallowner-managed businesses. Core Jelf clients are medium-sized owner-managedbusinesses, typically employing up to 250 staff. Jelf has developed a corporate support infrastructure that has enabled it tomake 15 acquisitions over the last two years. These acquisitions span all coreareas of its business and have been made to either supplement existingoperations or as in the case of John Lampier and Son and the Manson InsuranceGroup Limited to operate as stand-alone entities within the Jelf Group usingtheir own brand names. Further information is available on Jelf at the Group's website: www.Jelfgroup.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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