10 September, 2018: Merian Chrysalis Investment Company Limited (the “Company”), a newly established Guernsey investment company, today announces its intention to launch an initial public offering (“IPO”). The Company is targeting a raise of £200 million via an initial placing, intermediaries offer and offer for subscription (together the “Issue”) of ordinary shares in the capital of the Company (“Ordinary Shares”). A twelve month placing programme will also be launched.
Application will be made for the Ordinary Shares to be admitted to trading on the London Stock Exchange (“First Admission”). The Company’s investment adviser will be Old Mutual Global Investors (UK) Limited (“OMGI”) and will be the first fund launch following OMGI’s rebrand to Merian Global Investors (UK) Limited at the beginning of October.
Investment objective: The Company’s investment objective is to generate long-term capital growth through investing in a portfolio consisting primarily of equity or equity related investments in unquoted companies.
Portfolio construction: The Company will look to invest in attractively valued minority, private investments with long-term growth rates substantially better than the average UK plc. Once fully invested, it is expected that the Company’s portfolio will typically consist of between 7 and 15 investments, with net proceeds from the IPO expected to be substantially deployed within 6 to 9 months of First Admission.
Investment Adviser: OMGI will act as investment adviser to the Company. The investment advisory team will be led by Richard Watts and Nick Williamson, members of OMGI’s award-wining UK small- and mid-cap desk. The desk has £7 billion assets under management (as at 31 July 2018) and has invested around £300 million in unlisted companies, namely The Hut Group, TransferWise and Secret Escapes, over the past 12 months. Both portfolio managers have strong track records and have considerable experience of IPO investing.
Fee structure: The Company will have an ongoing management fee of 0.5% per annum of its net asset value (with no fee on uninvested cash until 90% of IPO proceeds are deployed). There will also be a performance fee of 20% of returns in excess of 8% per annum, compounding hurdle with a high watermark. The performance fee will be payable annually, where there is sufficient net realised profit with deferral to future periods where there are insufficient net realised profits.
OMGI believes that private markets represent an attractive investment opportunity. With many businesses choosing to stay private for longer, the market is growing in significance and the opportunity for investment in high-growth, pre-IPO companies is increasingly compelling.
The Company will look to make private investments in companies where the valuation appears attractive, particularly against a listed market background. These businesses are typically at an advanced stage of private ownership and beginning to consider an IPO.
OMGI’s UK small- and mid-cap team has significant experience investing in IPOs. With many mature private businesses sharing similar investment characteristics to those at IPO, OMGI’s scale, track record and reputation means it is one of a small pool of investors with the experience to act in the crossover space. While OMGI’s track record and reputation have been important in sourcing potential investments, it is increasingly clear that scale is becoming a key factor in successfully implementing a private opportunities strategy. OMGI is one of the largest dedicated UK portfolio managers in the asset class and believes that few competitors have comparable resources to support the successful IPO of an investee company.
Richard Watts commented:
“We believe this launch represents an exciting opportunity for investors to gain exposure to a high-growth area of the market that is typically difficult to access. With multiple investment opportunities across a range of evolving sectors, we believe there is an excellent opportunity to generate attractive capital returns for our investors by backing good management teams to continue to build great businesses.”
Nick Williamson added:
“Utilising our proven and rigorous process, we believe we are extremely well positioned to exploit the compelling investment opportunities available in this highly attractive but under allocated area of the market. As a desk we have considerable experience in determining listed valuations across a wide spectrum of sectors. Further, we believe our scale makes us an attractive crossover investor for private companies at this pivotal stage in their development. We look forward to applying our established practice to this new strategy.”
Liberum Capital Limited (“Liberum”) is acting as Global Co-ordinator, Bookrunner, Sponsor and Financial Adviser in relation to the Issue, and working alongside Zeus Capital Limited (“Zeus Capital”) as Joint Bookrunner.
Further details relating to the Issue will be set out in the Company’s prospectus, scheduled to be published in early October.
Neither the content of the website of the Company, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.
Notes to editors
Ged Brumby, Smithfield Consultants | 020 7903 2527
Olivia Evans, Smithfield Consultants | 020 7903 2531
Amelie Shepherd, Old Mutual Global Investors | 020 7332 8345
Global Co-ordinator, Bookrunner, Sponsor and Financial Adviser:
Liberum (Global Co-ordinator, Bookrunner, Sponsor and Financial Adviser) | 020 3100 2000
Gillian Martin, Andrew Davies, Christopher Britton
Zeus Capital (Joint Bookrunner) | 020 3829 5000
John Goold, Rupert Woolfenden
Portfolio management team biographies:
Richard Watts joined OMGI in 2002 and manages the Old Mutual UK Mid Cap Fund. He initially joined the UK mid- and small-cap team as an analyst before assuming full portfolio management responsibilities in 2009. He joined from Orbis Investment Advisory where he spent two years as an equity analyst, before which he was a senior associate in the investment management division of PwC. Richard has a degree in mathematical sciences from the University of Oxford, is IIMR qualified and is a CFA charterholder.
Nick Williamson has worked at OMGI since 2008, covering a variety of sectors for the wider UK equities team. Prior to his appointment as manager of the Old Mutual UK Smaller Companies Focus Fund in 2016, Nick acted as deputy manager on both the onshore and offshore UK smaller companies funds, since January 2014. Before this he was a sell-side analyst for more than 10 years, with a broad range of analytical responsibilities, most recently at Citigroup. Nick has an economics degree from Durham University and is a CFA charterholder.
Old Mutual Global Investors:
Old Mutual Global Investors (OMGI) is a leading, independent, global asset management firm. It is focused on delivering strong investment performance and customer-focused investment solutions that result in positive long-term outcomes. The business had assets under management of £34.4 billion, as at 31 July 2018.
On 29 June 2018, OMGI was acquired by the OMGI management team and funds managed by TA Associates, the global growth private equity firm. The business will be renamed Merian Global Investors on 1 October 2018.
This announcement is a financial promotion and is not intended to be investment advice.
The contents of this announcement have been prepared by, and are the sole responsibility of the Company, have been approved by Liberum, solely for the purposes of section 21 of the Financial Services and Markets Act 2000 (as amended) (“FSMA”), which is authorised and regulated by the Financial Conduct Authority.
This announcement is an advertisement and does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for, any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor. Copies of the prospectus will be available from the registered office of the Company and on its website in due course.
The information contained in this announcement is for background purposes only does not purport to be complete. It is also subject to change. Before subscribing for any Ordinary Shares, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus when published. The value of Ordinary Shares is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. The price and value of securities can go down as well as up, and investors may get back less than they invested or nothing at all. Potential investors should consult an independent financial advisor as to the suitability of the securities referred to in this advertisement for the person concerned. Any investment should be long term in nature. Further details including relevant details of all charges and minimum subscription amounts will be set out in the prospectus, when published.
Recipients of this announcement who are considering acquiring Ordinary Shares following publication of the prospectus are reminded that any such acquisition must be made only on the basis of the information contained in the prospectus which may be different from the information contained in this announcement. The subscription for Ordinary Shares is subject to specific legal or regulatory restrictions in certain jurisdictions. Persons distributing this announcement must satisfy themselves that it is lawful to do so. The Company assumes no responsibility in the event that there is a violation by any person of such restrictions.
This announcement may not be published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “US Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and will not be offered, sold, exercised, resold, transferred or delivered, directly or indirectly, in or into the United States or to, or for the account or benefit of, any US person (as defined under Regulation S under the US Securities Act). The Company has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended.
Neither this announcement nor any copy of it may be taken or transmitted into or distributed in any member state of the European Economic Area (other than the United Kingdom), Canada, Australia, the Republic of South Africa or Japan or any resident thereof. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.
This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts regarding the Company’s investment strategy, financing strategies, investment performance, results of operations, financial condition, prospects and the dividend policies of the Company and the instruments in which it will invest. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward- looking statements. These factors include, but are not limited to, changes in general market conditions, legislative or regulatory changes, changes in taxation regimes or development planning regimes, the Company’s ability to invest its cash in suitable investments on a timely basis and the availability and cost of capital for future investments.
The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by FSMA, the Listing Rules or Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
Liberum Capital Limited and Zeus Capital Limited, each of which are authorised and regulated by the Financial Conduct Authority in the United Kingdom, are acting only for the Company in connection with the matters described in this announcement and are not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of each of them or advice to any other person in relation to the matters contained herein. Apart from the responsibilities and liabilities, if any, which may be imposed by FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither Liberum Capital Limited, Zeus Capital Limited nor any of their respective affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for this announcement, its contents or otherwise in connection with it or any other information relating to the Company, whether written, oral or in a visual or electronic format.