B.P. Marsh & Partners Plc
(“B.P. Marsh” or “the Company”)
Proposed Placing and Open Offer to raise up to £17.0 million
and
Notice of General Meeting
B.P. Marsh & Partners Plc (AIM: BPM), the specialist venture capital investor in early stage financial services businesses, today announces a conditional placing of 6,169,194 new Ordinary Shares (the “New Placing Shares”) to a new investor in the Company (the “Investor” or “PSC”), an entity in the PSC Insurance Group (“PSC Group”), at a price of 252 pence each (the “Issue Price”) to raise gross proceeds of approximately £15.5 million for the Company (the “Placing”). Additionally, the Placing will also include the transfer by B.P. Marsh Management Limited (a company wholly owned by Brian Marsh, the Executive Chairman of the Group) of 1,166,310 Existing Ordinary Shares (the “Sale Shares”) to the Investor, who has also agreed to acquire the Sale Shares at the Issue Price.
In addition, in order to provide existing Shareholders with an opportunity to participate in the proposed issue of New Ordinary Shares, the Company is intending to launch an open offer to all Qualifying Shareholders (the “Open Offer”) to give them the opportunity to subscribe for an aggregate of up to 595,238 new Ordinary Shares (“Open Offer Shares”) to raise approximately £1.5 million (before expenses) for the Company, on the basis of 1 Open Offer Share for every 21 Existing Ordinary Shares held on the Record Date, at the Issue Price. Qualifying Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through an Excess Application Facility.
The Directors intend to use the net proceeds of the Placing and Open Offer received by the Company to grow the Company's existing portfolio as well as to continue investing in early stage financial services intermediary businesses with the aim of becoming the capital provider of choice for the sector.
Background to the Placing and Open Offer
The PSC Group is a diversified insurance intermediary group with operations in Australia, New Zealand and the United Kingdom. The PSC Group is listed on the Australian Stock Exchange (ASX) with a market capitalisation of approximately A$731 million. The PSC Group comprises a portfolio of businesses, ranging from early stage to mature businesses, within the general insurance intermediary and services market.
The PSC Group wishes to expand its business interests in the United Kingdom by making a substantial investment in the Company. Additionally Brian Marsh, the Executive Chairman of the Group, who (along with certain of his connected persons, being B.P. Marsh Management Limited and the Marsh Christian Trust, as further referred to below) currently holds in excess 60.7 per cent. of the Ordinary Shares, wishes to diversify his personal holdings by transferring beneficial interests representing approximately 4.0 per cent. of the Existing Issued Share Capital (held through B.P. Marsh Management Limited, a company wholly owned by Brian Marsh) to a suitable, supportive third party investor.
Immediately following the Placing and Open Offer, the Investor will hold 7,335,504 Ordinary Shares in the Company, representing approximately 19.6 per cent. of the Enlarged Share Capital. The Investor will, as a result of the Placing, become a substantial shareholder in the Company.
The PSC Group and B.P. Marsh are complementary listed businesses operating in the insurance intermediary sector and the investment is considered by both businesses to be an excellent strategic and cultural fit. Both businesses have successful investment track records in the insurance intermediary space, without taking underwriting risk. Following the investment, B.P. Marsh and the PSC Group will consider themselves partners, with added strength and growing possibilities to work together in the UK and internationally.
Commenting on the Placing and Open Offer, Brian Marsh, Executive Chairman of B.P. Marsh, commented:
“We view the partnership with PSC as containing considerable potential, which will benefit our business and, in turn, prove valuable for shareholders.”
Commenting on the Placing and Open Offer, Paul Dwyer, PSC's Group Managing Director, commented:
“PSC is delighted to be investing in and partnering with B.P. Marsh. B.P. Marsh is a world class investor in insurance intermediary assets and businesses, and has a very strong management team. We expect to be a long term investor, and expect over time for there to be numerous collaboration opportunities. We believe the best of both PSC and B.P. Marsh will bring benefits to the shareholders of both companies. The investment in B.P. Marsh is likely to broaden the global horizons of PSC over time.”
Details of the Placing and Open Offer
The Placing and Open Offer are conditional, inter alia, on the passing, without amendment, of the relevant Resolutions by Shareholders at the General Meeting which is to be convened for 3.00 p.m. on 5 July 2018 at the Company's offices at 4 Matthew Parker Street, London, England SW1H 9NP and on the Admission of the New Ordinary Shares to trading on AIM. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence no later than at 8.00 a.m. on 9 July 2018.
The Directors are fully supportive of the Open Offer and they (other than Brian Marsh, as detailed below) have indicated their intention to participate in full in the Open Offer in respect of their respective Basic Entitlements, and, to the extent possible, may also request additional Open Offer Shares through the Excess Application Facility.
To allow the remaining Qualifying Shareholders the opportunity to subscribe for more Ordinary Shares in the Company, in respect of their Basic Entitlements, and to reduce the dilutive impact of the Placing, Brian Marsh has irrevocably undertaken not to subscribe for any entitlements under the Open Offer (and has undertaken to procure that B.P. Marsh Management Limited, a company wholly owned by Brian Marsh, shall do the same), except that Brian Marsh has agreed to subscribe for any residual Excess Shares that are not taken up under the Excess Application Facility by the remaining Qualifying Shareholders up to a financial limit of £500,000 (the “Brian Marsh Subscription Commitment”). The entitlements which might otherwise have been available to Brian Marsh and B.P. Marsh Management Limited under the Open Offer will, therefore, be available for subscription by the remaining Qualifying Shareholders as part of their Basic Entitlements.
The terms and conditions of the Open Offer, including the Excess Application Facility, will be set out in the Circular to Shareholders, which will also include a notice convening a General Meeting. The Circular will set out the reasons for, and provide further information on, the Placing and Open Offer, to explain why the Board considers the Placing and Open Offer to be in the best interests of the Company and its Shareholders as a whole, and why the Board recommends that Shareholders vote in favour of the Resolutions. It is expected that the Circular will be dispatched on or around 13 June 2018 and will also be available at this time on the Company's website at www.bpmarsh.co.uk.
Panmure Gordon (UK) Limited (“Panmure Gordon”) is acting: (i) as nominated adviser, financial adviser and broker to the Company in connection with the Placing and Admission; and (ii) as agent for B.P. Marsh Management Limited, in relation to the Placing. Panmure Gordon will not be conducting a bookbuilding exercise in respect of the Placing and New Placing Shares will not be issued to any person other than the Investor. The Placing and Open Offer will not be underwritten. The Placing Shares are not subject to clawback and are not part of the Open Offer. The Sale Shares will not be transferred to any person other than the Investor.
The Placing and the Open Offer are separate and distinct transactions involving the issue of Ordinary Shares. However, the Open Offer is conditional on the Placing and will not be implemented independently if for any reason the Placing lapses.
Dividends
The New Placing Shares and the Open Offer Shares will, following Admission, rank pari passu in all respects with the Existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid on or in respect of the Ordinary Shares after Admission. The Directors have agreed that the New Placing Shares and the Open Offer Shares will be entitled to receive the Company's final cash dividend of 4.76 pence per Ordinary Share in respect of the 12 month period ended 31 January 2018 (the “2018 Final Dividend”), subject to Shareholder approval of the dividend at the Company's forthcoming annual general meeting. Under the Company's intended dividend timetable, the Ordinary Shares will be quoted ex the 2018 Final Dividend on 12 July 2018, and the record date for entitlement to participate in the 2018 Final Dividend will be 13 July 2018.
However, in the unlikely event Admission does not occur at 8.00 a.m. on 9 July 2018, being the expected date of Admission, and is subsequently delayed beyond the date on which the Ordinary Shares are quoted ex the 2018 Final Dividend (being 12 July 2018), the New Placing Shares and the Open Offer Shares will be issued “ex-dividend” and the holders of the New Placing Shares and the Open Offer Shares will therefore not be entitled to receive the 2018 Final Dividend.
Employee share incentive schemes
2018 JSOP
The Company has established a new joint share ownership plan (the “2018 JSOP”) for eligible Group employees and senior executives to replace the 2014 JSOP, which matured in November 2017. The purpose of the 2018 JSOP is to provide eligible employees of the Group with a joint beneficial ownership in and an opportunity to benefit from any possible appreciation in the value of Ordinary Shares in the Company subject to a suitable hurdle rate.
To implement the 2018 JSOP, the Group has established an employee benefit trust which intends to subscribe for 1,461,302 new Ordinary Shares, representing 5.00 per cent. of the Existing Issued Share Capital, at the time the awards are made.
2018 SIP Allocation
As an update to the statutory “schedule 2” share incentive plan of the Company established by the Group on 29 March 2016 (the “B.P. Marsh SIP”), the Company intends to issue and allot up to 26,303 Ordinary Shares to the B.P. Marsh SIP Trustee as part of the 2018 SIP Allocation, representing 0.09 per cent. of the Existing Issued Share Capital. The Ordinary Shares held by the B.P. Marsh SIP Trust will be granted to eligible employees. It is expected that certain Directors will participate in the award of shares under the B.P. Marsh SIP.
As such, references throughout this Announcement to 'Enlarged Share Capital' mean the issued share capital of the Company immediately following Admission, assuming the maximum number of Open Offer Shares are allotted and including the new Ordinary Shares that are expected to be allotted under the 2018 JSOP and the new Ordinary Shares that are expected to be allotted under the 2018 SIP Allocation prior to Admission, being in aggregate up to 1,487,605 new Ordinary Shares, representing 5.09 per cent. of the Existing Issued Share Capital.
This Announcement should be read in its entirety. Further details of the Placing and Open Offer are set out in Appendix I to this Announcement. Shareholders' attention is also drawn to the risk factors described in Appendix II. The capitalised terms used in this Announcement have the meaning set out in Appendix III to this Announcement.
This Announcement contains inside information for the purposes of Article 17 of the Market Abuse Regulation (EU) No 596/2014. The person responsible for arranging the release of this Announcement on behalf of the Company is Sinead O'Haire, Group Company Secretary and Chief Legal Officer.