As reported yesterday, Link Group has will as shareholders to fund much of its near $1.5 billion move into the UK via the acquisition of the asset management arm of struggling British outsourcing group, Capita.
Link on Monday announced a $883 million share offer, with the balance of the purchase price funded through a combination of $664 million of debt from existing and new bank facilities and existing cash.
The share offer is fully underwritten by JPMorgan and Citi and will be offered to both retail and institutional investors via a 4 for 11 pro rata accelerated renounceable entitlement offer at $6.75 per share against the last price on Friday of $7.83.
This is a 13.8% discount to the last traded price and around 131 million new shares will be issued which is equivalent to around or the number of share son issue will rise by 36%, which is a significant dilution for existing holders.
"Link Group remains committed to maintaining a prudent balance sheet, with pro forma net debt to EBITDA ratio of approximately 2.8x following the Acquisition . Given the high cash-flow generation of the combined group, Link Group considers this initial leverage target to be the right balance," Link said in a statement.
The institutional entitlement offer will be conducted from closes later today and the The retail entitlement offer will open on Wednesday, July 5 and close on Monday, July 17. Link says it will cut 15million pounds or around $A22 million in costs “over the medium term.”
Link Group CEO John McMurtrie, said: in yesterday’s statement “CAS (the UK business being bought) is a business with strong market positions across its operating units, underpinned by longstanding customer relationships and an experienced management team.
:The business is highly complementary to Link Group and represents an attractive platform for our company’s further expansion into the UK and European markets.”
"CAS provides Link Group with established market positions in multiple sectors in the UK and an established footprint in Europe for further growth. CAS administers and safeguards approximately £600 billion of assets and in 2016 managed approximately £45 billion in annual payments for its customers. Link Group will leverage CAS’ strong market positions and client relationships to drive further growth in existing markets and ultimately further expansion across Europe.
"CAS provides products and services and operates in end-markets which are well understood by Link Group. The acquisition of CAS is strongly aligned with Link Group’s strategy to grow through further penetration of attractive markets and expand its product and regional capabilities. CAS operates in four major business segments:
Fund Solutions: third-party administration and transfer agency services to asset managers and a variety of investment funds – leading independent Authorised Fund Manager (“AFM”) in the UK;
Shareholder Solutions: share registration, share plans services and treasury solutions to corporate clients – top three registrar to UK listed companies;
Corporate & Private Client Solutions: trustee, administration, domiciliation and governance services to corporates and investors – established player in highly regulated jurisdictions; and
Banking & Debt Solutions: loan processing, administration and work-out services to lenders and investors – leading independent debt servicer in UK and Ireland.
Link Group Chairman, Michael Carapiet, said in yesterday’s statement: “We are confident that this transaction will have a strong positive impact on Link Group. Our management team has spent a significant amount of time assessing growth opportunities for Link Group in offshore markets and this acquisition materially expands Link Group’s footprint in the UK and Europe in business lines we understand well.”
