Caledonia Investments plc (LON:CLDN) today announced that it has agreed terms to acquire a minority stake in Stonehage Fleming Family & Partners Ltd, one of the world’s leading independently owned family offices.
Stonehage Fleming was formed in 2015 through the merger of Stonehage Group and Fleming Family & Partners. Stonehage Fleming is the largest family office in EMEA and the second largest non-bank provider of family office services globally, a market which is estimated to be growing at around 9% per annum, driven by the rising demand of ultra-high net worth families for assistance in the organisation of their wealth.
Caledonia’s investment will be structured by way of a tender offer made to all of Stonehage Fleming’s shareholders, that will take place in conjunction with a share buy-back offer by Stonehage Fleming and will result in Caledonia acquiring 36.7% of the fully diluted capital. The transaction is conditional on obtaining regulatory approvals in a number of jurisdictions, which are expected within three months.
The exact consideration payable by Caledonia on completion will be dependent on the precise number of shares to be acquired in order to achieve the 36.7% stake, but will be approximately £92m. Caledonia has also agreed to pay additional deferred consideration of up to a maximum of £20.6m, contingent on Stonehage Fleming achieving certain financial targets for its years ending 31 March 2020 and 2021. To expedite the tender offer, Caledonia has further agreed to underwrite a £30m term loan facility for Stonehage Fleming as part of the funding of the transaction, although it is expected that a third party facility will be put in place with major international banks prior to completion of the transaction or shortly thereafter.
Caledonia will be investing alongside Stonehage Fleming’s existing shareholders, including the incumbent management team, whose principal executives are Giuseppe Ciucci (Group Chief Executive Officer), Ari Tatos (Managing Partner) and Ian Crosby (Partner – Chairman, Jersey). All of the management team will remain with the business following completion and they, together with other members of staff, will retain ownership of approximately 50% of the share capital. Caledonia will benefit from certain minority protections in relation to its shareholding, including agreed dividend policies and the structuring of its shares as preferred shares ranking in priority to the other shareholders in certain circumstances in terms of capital invested. Two members of Caledonia’s Unquoted team will also join Stonehage Fleming’s board.
Commenting on the acquisition, Duncan Johnson, Caledonia’s Head of Unquoted Investments, said:
“The increasingly complex ultra-high net worth market offers very attractive long term growth dynamics, which will offer significant opportunities to Stonehage Fleming given its breadth of service and geographical reach. This transaction fits our strategy of investing in well-established private companies, with proven management teams, offering long term capital growth potential, as well as strong cash generation to support an attractive dividend yield.
“Caledonia had a very successful investment in Robert Fleming Holdings in the decade up to its acquisition by Chase Manhattan Bank in 2000 and we are delighted to have again become involved in its successor business. We look forward to working with Giuseppe and the team to build further on Stonehage Fleming’s success in the years to come.”
Giuseppe Ciucci, Stonehage Fleming’s Group Chief Executive, commented:
“Today’s rapidly changing world offers great opportunity and challenges to wealth creators and we believe there is considerable scope for Stonehage Fleming to develop its services further to help our clients protect their wealth and manage family succession. We are delighted to have found in Caledonia a long term financial partner with a similar ethos and heritage to our own, as we pursue our ambition to become the leading independent global family office.”