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This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").
For immediate release
18 November 2021
Hyve Group plc
("Hyve" or the "Company")
Acquisition of 121 Group and Agreement with Lenders
Hyve, the next-generation global events business, has agreed to acquire 121 Group (HK) Limited and 121 Partners Limited ("121 Group"), a market leading omnichannel meetings programme organiser focused on the Mining sector across EMEA, North America and APAC, for initial consideration of $28m (c. £21m). The estimated total consideration after earn-out is expected to be between approximately £42m and £50m1 (the "Acquisition").
Hyve also today announces it has placed 13,818,698 new ordinary shares in the Company (the "Placing Shares") to raise gross proceeds of approximately £14.79m, representing approximately 5.21% of the Company's existing issued share capital, with institutional investors (the "Placing"). The Placing Shares have been placed at a price of 107 pence (the "Placing Price"), representing a discount of 0.7% to the closing market price on 17 November 2021.
The Company also announces a direct subscription (the "Subscription") of 12,694,102 new ordinary shares at a price of 112.35 pence per new ordinary share (the "Subscription Shares" and the "Subscription Price") by investment funds managed by Strategic Value Partners, LLC ("SVPGlobal"), representing approximately 4.79% of the Company's existing issued share capital, to raise gross proceeds of approximately £14.26m. The Subscription Price represents a premium of 5.0% to the Placing Price. SVPGlobal are making this additional investment in Hyve as part of their continuing support for Hyve's growth strategy.
The net proceeds of the Placing and Subscription (together, the "Fundraise") will be used to fund the initial consideration.
The Group has also secured waivers to its leverage and interest cover covenants up to and including March 2023.
| Strategic highlights | |
| · | 121 Group has a proven model, with strong engagement at both online and in-person events |
| · | The acquisition will accelerate the development of Hyve's omnichannel strategy as 121 Group moved exclusively to online meetings during the Covid-19 pandemic, achieving higher margins and remaining profitable during the pandemic |
| · | 121 Group has benefited from first mover advantages, establishing itself as the leading one-on-one meetings provider for the mining investment communities since 2014. The acquisition presents an opportunity to share best practice across Hyve and 121 Group omnichannel events by transitioning the event onto Hyve's facilitated meetings platform |
| · | 121 Group's Cape Town meeting programme is highly complementary to Mining Indaba, with potential for synergies by creating an omnichannel platform for African mining and investment communities |
| · | The proven online model also opens new possibilities for Mining Indaba's expansion, with the ability to leverage existing 121 Group relationships with the mining investor communities internationally |
| · | The mining sector is underpinned by positive dynamics driving demand for investment into metals key to clean energy and better technology, such as copper, lithium and nickel |
| · | Olympus' distinct customer value proposition and omnichannel profile help to ensure it meets the Group's clear criteria for high-quality acquisitions |
| Financial highlights | |
| · | In the financial year to 31 March 2021, during which all meetings were held online, 121 Group reported revenue of $5.7m and adjusted EBIT of $2.5m2 |
| · | Strong momentum has continued into 121 Group's financial year to 31 March 2022 with YTD FY22 revenue double that of YTD FY21 |
| · | Despite a later booking cycle than typically seen within Hyve's events portfolio, forward bookings for the year currently stand at $7.3m3. With three key events to be held across February and March, there is an expectation of significant further revenue in addition to the already pre-booked revenue. Further upside to revenue expected over the near and medium term as face-to-face meetings return |
| · | Recommencement of in person meeting programmes to drive revenue and profit growth in addition to the continued development of the now well-established online meeting programmes |
| · | Transaction expected to be materially earnings enhancing in the first full financial year following completion |
| · | ROIC expected to be in excess of the Group's WACC in the first full financial year following completion |
| · | Hyve has secured further waivers in relation to its leverage and interest cover covenants up to and including March 2023. Minimum liquidity covenant of £40m remains in place |
| Transaction structure | |
| · | Initial consideration of £21m payable at completion, with an earn-out period to March 2024, during which management will remain in place |
| · | Three subsequent earn-out payments: |
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| o 8.5x EBITDA for the year ending 31 March 2022, less the initial consideration, payable in May 2022 |
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| o 8.0x EBITDA growth in the year ending 31 March 2023, payable in May 2023 |
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| o 7.0x EBITDA growth in the year ending 31 March 2024, payable in May 2024 |
| · | Total consideration, including the initial consideration, expected to be between approximately £42m and £50m. The total consideration is subject to a cap of £60m |
| · | Placing Shares and Subscription Shares will comprise an issue of 26,512,800 new ordinary shares representing approximately 10% of existing share capital under existing shareholder authorities |
| · | Admission of Placing Shares and Subscription Shares expected 22 November 2021 with completion of the Acquisition shortly thereafter |
| Hyve current trading | |
| · | Market trends remain consistent with those set out at the pre-close trading update published in October |
| · | The Covid-19 situation remains fluid with international travel still in recovery; management continue to actively manage and assess the situation |
| · | Group continues to see an increase in like for like customer spend and increasing visitor density |
| · | Strong platform in place for continued development of the omnichannel proposition |
| 1 | Total consideration subject to a cap of £60m. All consideration amounts based on a USD:GBP FX rate of 1.35 |
| 2 | Financial information cited in this announcement is sourced from management accounts and is unaudited. |
| 3 | Olympus unaudited financials: FY22 forward bookings to date calculated as at 8 November 2021, including: YTD revenue, bookings for any future FY22 meeting programmes and contracted Assay and IR Revenue |
Mark Shashoua, CEO of Hyve, commented:
"I am very pleased to announce the strategic acquisition of 121 Group, a market-leading one-on-one meeting provider for the mining sector. I am impressed by the advocacy which the founders have developed among the mining and investment communities and their foresight to develop this model, which has proven extremely popular both online and in person. This well-established company is highly complementary to our Mining Indaba event, while further accelerating our Group omnichannel offering and providing further profitable growth opportunities"
Toby Duckworth, 121 Group Founding Partner, commented:
"We are delighted to join Hyve Group with its global portfolio of market-leading events. We look forward to further growing our series of events with Hyve's support and leveraging the digital capabilities Hyve is building as part of its omnichannel strategy. We're particularly pleased that 121 mining Investment Cape Town and the Mining Indaba will now join forces to offer the mining investment community an unmissable week of professional matchmaking, learning and business development in Cape Town in May 2022"
The person responsible for arranging for the release of this announcement on behalf of Hyve Group plc is Jared Cranney, Company Secretary.
For further information please contact:
| Hyve Group plc Mark Shahuoa, CEO / John Gulliver, CFO / Marina Calero (Group Head of Investor Relations) |
+44 (0)20 3545 9000
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| Numis (Sole Broker and Sole Bookrunner) Nick Westlake / Matt Lewis / Hugo Rubinstein
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+44 (0)20 7260 1000
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| FTI Consulting Charles Palmer / Dwight Burden / Jamille Smith / Tom Blundell
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+44 (0)20 3727 1000
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About Hyve Group plc
Hyve Group plc is a next-generation global events business whose purpose is to bring together entire sector ecosystems from all corners of the globe. We meet our customer needs to learn, network and trade via both market leading in-person and online events.Hyve Group plc is all about globally consistent best practice and unrivalled quality. Our vision is to create the world's leading portfolio of content-driven, must-attend events delivering an outstanding experience and ROI for our customers. Hyve's market leading portfolio of global brands include: Shoptalk, Spring Fair, MosBuild, Bett, Mining Indaba and recently acquired Retail Meetup, a ground-breaking digital platform enabling online networking and trade to take place at scale.
Where business is personal, where meetings move markets and where today's leaders inspire tomorrow's.
121 Group Overview
121 Group was founded in early 2014. The Group organises invitation-only investor introduction and deal sourcing meeting programmes for the mining sector, where corporate participants have an obligation to market their businesses globally to investors and marketing budgets for such activities are high. The meeting programmes have been geo-cloned around the world and in key markets take place biannually. In addition, the Group runs an investor relations service for mining companies and The Assay - an online information and marketing site for the sector.
During the global pandemic, 121 Group quickly pivoted to run online meeting programmes. These programmes are supported with ongoing investor relations and industry intelligence supplied via the website, digital publication The Assay and the new Assay TV platform as well as 121 Group's YouTube channel and social media networks. These associated products provide additional touch points with clients and take-up and growth have been very strong. 121 Group has grown into an established provider of marketing services for small-mid cap mining companies looking to raise capital.
In its financial year to 31 March 2021, Olympus held 12,156 online meetings across nine meeting programmes with over 3,000 investors and 550 corporates participating.
In its financial year to 31 March 2019, the last full financial year prior to the impact of the pandemic, Olympus reported revenue of $9.6m and adjusted EBIT of $3.6m. In the financial year ended 31 March 2021, Olympus reported revenue of $5.7m and adjusted EBIT of $2.5m, with operating margin improving to 44% driven by the shift to a solely online proposition. Gross assets as at 31 March 2021 were $6.8m.
The sellers are four individuals: Toby Duckworth, Paul Martin, Charles Hastings and Leo Stemp; who are all expected to remain in post until the end of the earn-out in March 2024.
Additional information
Numis which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting solely for the Company and for no one else in connection with matters set out in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to matters set out in this announcement. Numis are acting as placing and settlement agent in connection with the Placing.
This announcement contains forward-looking statements relating to the business, financial performance and results of Hyve's and the industry in which Hyve operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither Hyve nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.
This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred directly or indirectly in or into the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of the Placing Shares or the Subscription Shares in the United States.
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