Integrated Asset Management plc (Integrated) has acquired a 50.1% controlling interest in London-based Attica Holdings and its fund of hedge fund subsidiaries.
The stake was acquired from Sal. Oppenheim International Luxemburg SA, a subsidiary of Sal. Oppenheim jr. & Cie. KGaA, Germany's largest private bank. Integrated also has the option to acquire the remaining 49.9% for a combination of cash and shares for a total consideration of up to EUR 13.45 million, subject to the satisfaction of certain performance criteria.
The highlights of the deal are as follows:
- Sal. Oppenheim to become Integrated's single largest shareholder with 27% of Integrated's share capital
- Acquisition will increase assets under management to over USD 1.1 billion
- Cost savings likely to be in excess of GBP 1 million for the combined operation
- Integrated appointed as preferred partner to Sal. Oppenheim for fund of hedge fund products
'We are delighted to achieve this critical milestone in our growth strategy,' says Emanuel Arbib, Chief Executive of Integrated. 'This acquisition is an excellent example of our goal to augment our organic growth with strategic acquisitions in the fund of hedge fund industry. Moreover, we are honoured to partner with a bank of the calibre of Sal. Oppenheim. This transaction furthers our already strong relationship with Sal. Oppenheim, which has proven very successful through an exclusive relationship in structured products for the past several years.
'In addition, we welcome the Attica investment management and sales team, which brings excellent skills and track record to our existing strong platform. The combination of Attica and GAIM Advisors will enable us to achieve significant synergies and cost savings, which will favourably impact our earnings for the full year 2006. We have invested heavily in our investment and risk management over the past twelve months, and have seen the fruition of our efforts in the performance of our three main funds, which are up 17.55%, 9.67% and 7.37% respectively for the twelve months to March 2006.'
Sal. Oppenheim, founded 1789, is the largest independent privately owned bank in Europe, following the successful business model of a combined asset management and investment bank. The Sal. Oppenheim Group has total assets under management of around EUR 125 billion and is currently one of the leaders on the derivatives, certificates and investment products market in Germany. As a result of the acquisition Sal. Oppenheim will become the single largest shareholder in Integrated.
Attica is an active provider of fund of hedge fund products and has had a close working relationship with Sal. Oppenheim for several years. Sal. Oppenheim is Attica's main client. The acquisition does not extend to Attica Holdings (Cayman) and the remainder of its subsidiaries which will change their names from Attica in due course.
Terms of the acquisition
Integrated has entered into an agreement, inter alia subject to certain conditions to acquire 50.1% of the issued share capital of Attica Holdings (UK) Limited, Attica Alternative Investments Ltd, Attica Alternative Investments AG and all the management shares of Attica International Portfolio Ltd from Sal. Oppenheim International Luxemburg S.A and Sal. Oppenheim jr. & Cie. KGaA.
The initial consideration for the acquisition is EUR 5.01 million which, subject to Sal. Oppenheim's right to request payment in cash in certain circumstances, Integrated will pay to Sal. Oppenheim by delivery of 6,311,032 fully paid up listed Integrated ordinary shares of GBP 0.05 each ('the Consideration Shares') which shall constitute approximately 27.01% of the thus enlarged issued share capital of Integrated. The agreement contains a provision to protect Sal. Oppenheim from any dilution of their expected holding prior to closing. Sal. Oppenheim is subject to certain timing restrictions in selling the Consideration Shares.
The agreement contains put and call options for Sal. Oppenheim to sell and Integrated to buy the balance of the issued shares of Attica. The consideration for the exercise of the put and call options is a maximum amount of EUR 8,450,000 payable through a combination of cash and further Ordinary Shares of Integrated, subject to the fact that the combined consideration in shares issued to Sal. Oppenheim shall not result in them holding over 29.99% of the existing issued share capital of Integrated.
The contract is conditional inter alia upon shareholder approval for the issue of the new Ordinary Shares to Sal. Oppenheim and on the consent of the Financial Services Authority.
Sal. Oppenheim has the right to transfer half of its holding in Integrated, subject to the put and call options referred to above, to a mutually agreed third party investor.
Attica Holdings UK Limited, the non-trading holding Company, had net assets as at 31 March 2006 based upon management accounts and adjusted to reflect the capital reorganisation to be effected prior to completion, of approximately GBP 3.1 million. Attica Alternative Investments Limited, the FSA- regulated operating subsidiary, had turnover of GBP 975,000 and a net profit of GBP 94,000 for the three months ended March 31, 2006. The Board of Integrated consider that cost savings in a full year following completion, are likely to be in excess of GBP 1 million for the combined operation.
The accounts of the Attica Group will be the subject of a completion audit and there is likely to be a delay of up to three months before all relevant consents have been received. A further announcement containing further financial information will be made at the time of completion.
Oppenheim's interest in Integrated
As a result of the transaction, Sal. Oppenheim will hold 27% of the issued share capital of Integrated Following the exercise of the put or call option Sal. Oppenheim may hold up to 29.99% of the then issued share capital.
As part of the transaction, Integrated has been appointed as Preferred Partner to Sal. Oppenheim in connection with Sal. Oppenheim's marketing of hedge fund of fund products to its significant customer base.
Under the agreement Sal. Oppenheim is entitled following completion to nominate two directors to the Board of Integrated, bringing the total number of directors to nine.
Effect on Integrated
The acquisition will increase the assets under management and advice by Integrated to over USD 1.1 billion. It will also combine the experienced investment and sales team of Attica with that of Integrated's alternative investment division, GAIM Advisors Ltd, which has over a decade of experience in managing alternative investments.
'Sal. Oppenheim is very pleased to continue its expansion by entering in the expanding hedge fund market and by further cementing its strategic relationship with Integrated,' says Detlef Bierbaum, Partner of Sal. Oppenheim. 'We are impressed with their product and corporate progress and look forward to partnering with Integrated to achieve further success in the hedge fund industry. As a bank, we believe alternative assets should play a bigger role, and we welcome Integrated as our joint venture partner in this endeavor. We are also pleased that the current Attica UK investment management team, with their excellent track record and wealth of experience, will remain in place to assure continuity.'