London-based RAB Capital plc has made its first strategic acquisition with the purchase of Cross Asset Management Ltd.
Roddy Campbell and David Linsley founded Cross in 1998, and are its major shareholders. RAB Executive Chairman Michael Alen-Buckley said: "This is our first strategic acquisition since RAB went public a year ago. Roddy Campbell is one of the best event-driven managers in the business, and we will be acquiring a top team, giving us another strong, scaleable, and non-correlated product for our portfolio. This demonstrates that RAB can attract high quality managers with proven track records, bringing value to the group."
Cross manages the Cross Europe Fund, a European event driven equity fund, which has in excess of USD 200 million assets under management and an excellent track record since inception. RAB will also take on the management contract for the Cross Credit Fund, a European event-driven credit strategy with USD 30 million assets under management.
Cross Europe Fund, which is one of the oldest European event-driven funds, has been managed since inception by Roddy Campbell, who will continue to manage both the Europe Fund and, together with Dan Worth, the Cross Credit Fund. Five employees of Cross, including Roddy Campbell, will join RAB, and David Linsley will assume a non-executive role in respect of certain RAB funds.
Campbell said: "I have known RAB since they started. I am very excited by the opportunity of combining our businesses. Joining RAB and moving our European Funds onto their operational and marketing platform will enable me to concentrate fully on portfolio management, which is what I do best. I started Cross Europe Fund nearly seven years ago, and look forward to the next seven years being even more successful for our investors."
Under the agreement, on completion of the proposed transaction RAB will pay a consideration comprising cash of GBP 1.8 million, the issue of 10.5 million ordinary shares and 4 million options, the terms of such options to be similar to RAB's existing option schemes. There will be a further cash payment in respect of Cross's net assets, estimated at GBP 2 million, which will be subject to the completion of due diligence on the closing balance sheet. This amounts to an aggregate consideration, valuing RAB ordinary shares at 50 pence (for illustrative purposes), of approximately GBP 9.5 million.
An application will be made to the London Stock Exchange for 10.5 million ordinary shares, with a nominal value of GBP 0.001 each, to be admitted to trading on AIM. Admission is expected once regulatory approval is obtained.