29th Aug 2007 07:00
Standard Life plc29 August 2007 Standard Life plc Proposed re-organisation of the private equity business of Standard LifeInvestments Standard Life plc ("Standard Life") announces that it proposes to re-organiseits private equity investment management business by transferring all of thebusiness currently carried on by Standard Life Investments (Private Equity)Limited ("SLIPE") to a new limited liability partnership, SL Capital PartnersLLP ("LLP"), of which 40% will be owned by nine members of the current SLIPEinvestment management team. Details on SLIPE SLIPE is a wholly owned subsidiary of Standard Life Investments Limited. Itprovides private equity investment management and ancillary services to avariety of fund of funds vehicles, structured as limited partnerships, and toStandard Life European Private Equity Trust PLC ("SLEPET"), an investment trustlisted on the London Stock Exchange in which Standard Life Assurance Limited hasa 50.6% interest. The business has €5.0 billion (£3.4 billion) of assets undermanagement, of which 72% come from over 140 third-party investors from 24countries. SLIPE's fund of funds vehicles offer investors access to privateequity fund investments and co-investments (whereby the fund invests alongsidedirect investors), predominantly in Europe and in the buy-out segment of theprivate equity market. For the financial year ended 31 December 2006 SLIPE reported audited revenue andprofit before taxation of £22.0 million and £6.6 million respectively and as at31 December 2006 had gross assets of £11.0 million. Rationale for the proposed re-organisation In participating through private equity fund of funds vehicles investors gainbroad exposure to private equity opportunities, diversifying their risk.Investors make capital commitments to these vehicles for long periods of timeand therefore seek substantial protection to ensure the continuity of themanagement team which invests their money, usually in the form of carriedinterest, key-man and change of control provisions in the fund. The re-organisation of Standard Life's private equity management business isproposed to address the desire of certain existing and potential investors toensure continuity of management and a greater alignment of interest betweeninvestors and the management team. The use of a limited liability partnershipwill provide flexibility in terms of structure and operations and is consistentwith the structure already employed by other managers in the private equityindustry. Terms of the proposed re-organisation The proposed re-organisation would involve the transfer of the business, assetsand liabilities of SLIPE, including the general partner companies associatedwith the limited partnerships managed by SLIPE, to the LLP. In exchange for thetransfer of the business, assets and liabilities, SLIPE would retain 100% of thecapital value of the business transferred and be entitled to 60% of the economicand voting rights in the LLP going forward. The remaining 40% of the economicand voting rights would be held by nine members of the current SLIPE investmentmanagement team, including the three executive directors of SLIPE, David Currie,Peter McKellar and Stewart Hay. As part of the re-organisation, the nine membersof the SLIPE investment management team will resign as employees of StandardLife Investments and become executive members of the LLP. The other 28 employeesinvolved in the private equity business, all of whom are located in StandardLife Investments' Edinburgh and Boston offices will become employees of the LLPor one of its subsidiaries. The agreement constituting the LLP (the "LLP Agreement") contains provisionswhich, if triggered, would allow the executive members of the LLP to acquire anadditional 13% of the economic and voting rights in the LLP from SLIPE at fairvalue. These provisions may only be triggered in certain circumstancesprescribed in the LLP Agreement, following either a disposal of the business ofthe LLP outwith the Standard Life group or a change of control of the LLP, SLIPEor any of its holding companies. It is anticipated that the re-organisation will become effective and the LLPwill commence trading on or around 1 October 2007. The re-organisation issubject to the LLP receiving appropriate FSA authorisation, which is pending,and to completion of all relevant legal formalities. 29 August 2007 Enquiries: Brian Simmons, Press Office, 0131 245 5935 Gordon Aitken, Investor Relations, 0131 245 6799 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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