Bermuda-based global financial services provider Apex Group Ltd appears on pace to complete a $2.07-billion (1.51-billion pound) acquisition of British asset management services provider, Sanne Group Plc.

A joint statement said they reached an agreement on the terms and conditions of a recommended all cash acquisition of the entire issued, and to be issued, ordinary share capital of Sanne, at 920 pence per share.

The Apex Group’s head office is in Bermuda, and following completion of the acquisition, it is expected that the functions of the Sanne Group’s existing London headquarters will be transferred to Bermuda, as well.

The Royal Gazette asked CEO & Founder, Peter Hughes, who began Apex in Bermuda in 2003, about anticipated changes for employees and clients.

He said: “Following completion of the acquisition of Sanne, we intend to work with Sanne’s management to undertake a detailed evaluation which will include assessing how the Sanne and Apex businesses can best complement each other.

“We do not expect any material change in the overall number of employees of Sanne, after taking into account the projected new roles.”

He added: “We have followed Sanne closely for a long time and have a great deal of respect for what the board and management team have achieved.

“As Sanne announced on August 2nd, we have been working closely with the board to complete due diligence.”

The companies said evaluation is anticipated to take approximately six months and will: assess how the Sanne and Apex businesses can best complement each other; analyse the level of overlap in central and support functions; determine the potential for efficiencies from combining operations; include an in-depth review of competitive market standing; and, identify opportunities for additional investment with the objective of driving growth.

The acquisition comes through Apex’s indirect wholly-owned subsidiary Apex Acquisition Company Limited, and becomes effective in the first half of 2022.

Mr Hughes told us: “We are confident that any required approvals will be forthcoming on a short timetable. Together with the advisers we have been working hard to get this far and have strong conviction we will be able to close the transaction as quickly as possible.

“The combination of Apex and Sanne will create one of the largest services providers to the alternative assets space with over $2.2 trillion of assets on the platform and will become a leader in closed-end fund services with over $1.2 trillion of assets under administration from closed-ended funds.”

The Royal Gazette also asked about the state of the market and with existing uncertainties, what he saw as exciting for the future.

Mr Hughes responded: “We are confident that a combination will facilitate even greater success for both companies and create opportunities to develop talent, while delivering attractive value creation for Sanne’s shareholders.

“A fundamental element of Sanne’s client centric growth strategy is the development of a best-in-class service offering by investing in the best people and training programmes, developing efficient and best-in-class processes and by investing in new technology.

“In this context, we believe that a combination with Sanne will maximise the combined group’s future growth and profitability potential through complementary product portfolios and geographic footprint, commitment to technology rich innovation, complementary cultures, and shared commitment to operational excellence.”

Publicly commenting on the announcement, Sanne Chairman Rupert Robson said: “Sanne has a bright future ahead of it as a leader in its industry, which is entirely due to the tremendous effort of the management team and employees of the business over the past several years for which the board of Sanne would like to express their gratitude.

“Sanne has delivered substantial value creation to its shareholders since IPO and today’s acquisition ensures that our investors are compensated for the future potential of the business, at what we believe is a compelling 28.8x EV/EBITDA and 40.7x P/E for 2020.”

Mr. Hughes was quoted: “Sanne offers an exciting opportunity for Apex to acquire a well-established alternative fund services provider with diverse and complementary jurisdictional and asset class expertise.

“We have long followed Sanne’s successful strategy of delivering “local excellence on a global platform” and we believe that as part of the Apex Group this could be an increasingly compelling offering for current and future clients.

“We are confident that a combination of our businesses to create one of the largest global service providers to the alternative assets space with over $2.2 trillion of assets serviced, will facilitate even greater success for both companies while representing attractive value for Sanne’s shareholders.”

The price per Sanne share represents a premium of approximately: 53 per cent to the closing price of 603 pence per Sanne share on 13 May (being the last business day before the commencement of the offer period); 44 per cent to the placing price of 640 pence per Sanne share on 8 April; and, 55 per cent to the volume-weighted average price of 593 pence per Sanne share for the six-month period ended 13 May (being the last business day before the commencement of the offer period).

The Apex Group has a long track record of success, delivering services to some of the most sophisticated asset managers in the world, including numerous multibillion dollar funds in a range of sectors.

In addition, the Apex Group is a highly experienced acquirer and has a proven track record of successful M&A, having announced and/or completed 21 acquisitions since 2017.

In order to maximise its future potential, Apex said it believes that Sanne will be better suited to a private company environment. This will release Sanne from the costs associated with being a listed company.

Further, with appropriate support and assistance from Apex, Sanne will be able to concentrate on organic growth and strengthen its client proposition.

A combination of Apex and Sanne is strategically and culturally compelling, creating a world leading, end-to-end services provider to the alternative assets space with significant scale servicing over $2.2 trillion in assets.

Combined, the Apex Group and Sanne would be a global leader in the provision of services to asset managers, family offices, financial institutions and corporates; delivering solutions including, but not limited to, fund services, digital onboarding and bank accounts, depositary, custody, super ManCo services, global compliance solutions, a digital marketing platform and a pioneering ESG Ratings and Advisory service for private companies.

This single source solution will drive improved efficiencies, superior quality and better outcomes for clients, employees and other stakeholders globally.