Polar Capital Holdings plc (Polar Capital) today announces it has reached an agreement to acquire 100% of the issued share capital of Dalton Capital (Holdings) Limited. Polar Capital, the specialist active asset management group acquires the parent company of Dalton Strategic Partnership LLP (Dalton).
Dalton is a UK based boutique asset manager with Assets under Management of £1.24bn, as of 15 December 2020. This AuM figure excludes AuM in the Velox Fund which is on the Dalton platform.
Dalton is a London based, independent, asset manager with a strong European equity capability and distribution reach. The firm’s acquired AuM comprises of £1.12bn in the Melchior European Opportunities Fund, and related segregated accounts, managed by David Robinson. Another £0.12bn is made up of European long/short funds managed by Leonard Charlton and three smaller Global and Asian funds managed by Nick Mottram.
The Melchior European Opportunities Fund has a strong performance record since its inception in 2010. delivering top quartile performance within its Morningstar peer group over the last three and five, and ten years.
The Acquisition has a strong strategic rationale for Polar Capital with its growth and diversification strategy. It adds a leading European investment team which is complementary to Polar Capital’s existing European Income team, with established funds, and a longstanding track record. It also provides Polar Capital with broader wholesale and institutional distribution into Europe, particularly in the German market. The Acquisition includes the existing Luxembourg SICAV umbrella which will aid Polar Capital’s product range for international distribution.
The total consideration is based on the AuM at exchange and at current AuM will total circa £15.6m split between the initial consideration of £8.3m. £7.8m of which will be paid in cash from Polar Capital’s existing resources and £0.5m in Polar Capital shares and further deferred cash consideration in the region of £7.3m, payable 12 months after completion, linked to the value of AuM at the time. While the deferred consideration will vary up or down with the level of AuM, the maximum deferred consideration payable is circa £13.2m, therefore the maximum payable under the transaction is circa £21.5m.
The costs of the Transaction are expected to be £6.2m in total and will include £2.6m of termination costs and £3.6m of reorganisation costs. The termination and reorganisation costs will be treated as exceptional items to be incurred in the financial years ending March 2021 and March 2022. Following the completion of the Transaction it is anticipated that the Acquisition will, on an adjusted diluted earnings per share basis, immediately enhance earnings.
The Acquisition is subject to FCA approval and is expected to complete in Q1 2021 with a transition of the DSP business onto the Polar Capital platform during Q2 2021.
Gavin Rochussen, CEO, Polar Capital said: “The Acquisition of Dalton Strategic Partnership is further delivery of our growth and diversification strategy and is an excellent strategic, geographic and cultural fit with our existing business. It delivers greater scale, new capabilities and an expanded distribution reach in Europe, as well as highly experienced investment teams with a good track record. This acquisition will also provide Polar Capital with its first Luxembourg SICAV.
We are confident that the acquisition will be immediately earnings enhancing and look forward to welcoming the DSP team and clients to Polar.”
Nick Mottram, CEO, Dalton said: “ We have long been impressed by Polar Capital’s strong client focus, proposition and growth aspirations and are delighted to be joining the Group. It is a good cultural fit for us and that was important when we were looking to join a larger group, as we wanted to ensure we retained investment autonomy over our funds, something that our founding partner, Andrew Dalton, believed in fundamentally when he started the firm back in 2002.
The managers of our two key investment strategies, David Robinson and Leonard Charlton , are committed and enthusiastic about the Acquisition and the opportunity it will provide to further develop their investment propositions to the benefit of their investors.
We are confident that this is an excellent strategic fit for Dalton and look forward to growing a strong franchise within Polar Capital.”