Anexo Group plc (LON:ANX), the specialist integrated credit hire and legal services provider, has announced a new major shareholder and to provide a trading update in respect of H2 2020 to date.
The Group announces today that it and its controlling shareholders have entered into agreements with leading private equity firm DBAY Advisors Limited.
DBAY has agreed to acquire a minority stake of 29.0% of the issued share capital of the Group from Alan Sellers, Samantha Moss and Valentina Slater at a price of 150 pence per share.
Alan Sellers, who founded the Group in 1996, will continue in his role as Executive Chairman. Samantha Moss will remain as Managing Director, Bond Turner, and Valentina Slater will remain as Sales Director, Direct Accident Management Limited.
DBAY is an international asset management firm with offices in the Isle of Man and London. It set up its first investment vehicle in 2008 and now manages investments on behalf of institutional investors, family offices, pension funds, trusts and foundations in various funds. DBAY is owned by members of the firm on a partnership basis.
The Group plans to work closely with DBAY to continue the expansion of its Credit Hire and Legal Services divisions and is committed to the creation of value for all its shareholders.
Alan Sellers, Executive Chairman of Anexo Group, said: “We are delighted to welcome DBAY as a major shareholder in the Group. They have an excellent track record of smaller company investment and we look forward to working closely with them to achieve growth across our various business divisions.”
DBAY partner and Chief Investment Officer, Saki Riffner, said: “We are excited to invest in Anexo alongside Alan, who has built the business over the last 25 years, and we are looking forward to working closely with him and his team to drive the future growth of the Group.”
DBAY will initially acquire 9.9% of the issued share capital of the Group. Following receipt of the necessary regulatory approvals from the Financial Conduct Authority and the Solicitors’ Regulatory Authority, DBAY will then acquire an additional 19.1% shareholding in the Group, resulting in an aggregate stake of 29%. Subject to these regulatory approvals, the second part of the transaction is expected to be completed within three months of this announcement.
Upon completion of the second part of the transaction, DBAY will have the right to appoint up to three Non-Executive Directors to the Group’s Board of Directors. At the same time, the Group will enter into an agreement with DBAY which restricts any material changes to the Group’s existing business model, including acquisitions, disposals and/or debt finance, without the majority consent of DBAY’s representatives on the Board of Directors.
It is anticipated that Alan Sellers, Samantha Moss and Valentina Slater will give undertakings which preclude any further disposals of their remaining shareholdings for a period of eighteen months following completion of the second part of the transaction. At the end of this period, they will undertake for a further twelve month period not to sell any part of their individual or collective holdings below the price of the transaction.
Information relating to the sale of shares to DBAY over the two tranches and the resulting holdings for Alan Sellers, Samantha Moss and Valentina Slater is provided in the table below:
|Ordinary Shares to be transferred to DBAY||Resulting holding after sale of both tranches||Percentage of issued share capital|
|Shareholder||Tranche 1||Tranche 2*|
* subject to SRA and FCA regulatory approval.
Current Trading and Outlook
The Group’s core businesses have continued to be fully operational following the reintroduction of a national lockdown. Activity levels in the Credit Hire Division (EDGE) continue to be high. The COVID-19 pandemic has led to a number of the Group’s competitors withdrawing from the market and, as a result, Anexo has been approached by a number of high-quality introducer garages looking for new partnerships. The Group has taken advantage of this unprecedented opportunity to expand its introducer network; as a consequence the number of vehicles on the road during H2 2020 has consistently exceeded internal targets and, as at 10 November 2020, stood at 1,902. Despite the decline seen at the start of the first lockdown in March and April 2020, the average number of vehicles on the road for FY 2020 is expected to exceed the figure for FY 2019.
The courts remain open, as they have done throughout the year, and the Group’s Legal Services division, Bond Turner, has continued to reach case settlements via telephone and online hearings where necessary. The Group is maintaining its expansion in staff numbers and the necessary supporting infrastructure and expects this investment to continue to support case settlements and cash collections into FY 2021.
Despite the COVID-19 pandemic, which has continued to have an impact on cash collections in H2 2020, the Board expects overall cash collections for FY 2020 to be ahead of the prior year. The expansion of the introducer network and the corresponding increase in the number of vehicles on the road has led to the expectation that H2 2020 will be a period of cash absorption rather than cash generation.
The Group announced on 28 January 2020 that a new regional office in Leeds for Bond Turner would open during FY 2020. Following delays caused by the COVID-19 lockdown, the Group is now pleased to confirm that a lease has been signed and the Leeds office will become operational in the first quarter of FY 2021. Staff have already been recruited and further recruitment will continue during the remainder of FY 2020 and throughout FY 2021.
Following its most recent marketing campaign concerning the legal action against Volkswagen AG (the ‘VW Emissions Case’), the Group is currently actively engaged on approximately 13,155 cases. These marketing campaigns are ongoing and, as previously announced, all associated costs are expensed as occurred. The Group continues to explore potential emissions claims involving other manufacturers.
The Anexo Group board confirms that, as stated at the release of its Interim Results on 13 August 2020, it expects H2 2020 underlying profit before tax (before investment in VW Emissions Case acquisition) to recover strongly from H1 2020 levels. Notwithstanding the current national lockdown and the continued uncertainty caused by the COVID-19 pandemic, the Group is trading in line with management expectations. The Board will provide further updates to the market in due course.