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DISCLOSURE OF INSIDE INFORMATION ACCORDING TO ARTICLE 17 OF THE UK VERSION OF REGULATION (EU) NO. 596/2014 (WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018).

This Announcement contains inside information for the purposes of the Market Abuse Regulation (EU) 596/2014 ("MAR")

LEI: 549300XVXU6S7PLCL855

For immediate release

7 December 2021

Liontrust Asset Management PLC

("Liontrust" or the "Company")

Proposed Acquisition of Majedie Asset Management Limited

Introduction

Liontrust, the specialist independent fund management group, today announces that it has entered into a conditional sale and purchase agreement (the "SPA") with founder shareholders (the "Founders") to purchase (the "Proposed Acquisition") the entire issued share capital of Majedie Asset Management Limited ("Majedie") for a total consideration of up to £120 million (the "Consideration").

Majedie is a well-established, UK-based asset management firm with a long-term pedigree in Institutional fund management, an area of increasing strategic focus for Liontrust. Majedie's assets under management and advice ("AuMA") as at 30 November 2021 were £5.8 billion¹. Rob Harris, Chief Executive Officer of Majedie, will join Liontrust as Head of Global Institutional Business.

The Proposed Acquisition brings to Liontrust the highly rated and experienced Institutional fund management team at Majedie (the "Majedie Fund Management Team") headed by James de Uphaugh. On completion of the Proposed Acquisition ("Completion"), all of the investment team members will join Liontrust as the Global Fundamental Team and James de Uphaugh will become Head of the Liontrust Global Fundamental Team.

Highlights of the Proposed Acquisition include:

·    The Majedie Fund Management Team has vast experience of, and a long-term pedigree in, institutional fund management;

·    The Majedie proposition has a well-established position in the UK investment management market that will benefit from the power, reach and engagement of Liontrust's distribution and brand;

·    The Liontrust brand will be used for all the Majedie funds;

·    The Proposed Acquisition will significantly boost Liontrust's existing institutional proposition and allow us to accelerate growth in this key segment of the market through increasing scale, our distribution and client base;

·    The institutional pedigree and focus of Majedie will enhance Liontrust's client service to the institutional market;

·    Majedie's clients will benefit from the enhanced resources of Liontrust;

·  Liontrust and Majedie believe that there is a very strong cultural alignment between the two organisations;

·    The Majedie Fund Management Team will remain unchanged under James de Uphaugh and will continue to manage their current funds and portfolios consistent with their existing and successful investment process;

·    Combining Majedie's investment funds with Liontrust's strong sales, marketing and brand among wealth managers and financial advisers is expected to strengthen further our position in this market;

·    Liontrust's pro forma AuMA will increase by £5.8 billion to over £42.3 billion¹;

·    Integrating the Proposed Acquisition will allow us to remove duplicate administrative activities across both businesses; and

·   The Proposed Acquisition, before transaction and re-organisation costs, is expected to be earnings enhancing with regards to our adjusted diluted earnings per share for the financial year ending 31 March 2023 and in future years.

¹ Liontrust's AuMA, excluding the Majedie AuMA, as at close of business on 26 November 2021 was £36.5 billion. Majedie AuMA as at close of business on 30 November 2021 was £5.8 billion.

The Consideration will be satisfied by the issue of up to £97.0 million in new ordinary shares of 1 pence each in the capital of the Company ("Ordinary Shares") and up to £23.0 million in cash to the shareholders of Majedie ("Majedie Shareholders"), see Details of the Proposed Acquisition section below for further details.

On Completion, the members of the Majedie Fund Management Team will continue to manage the existing Majedie funds and Investment Trust mandates:

1.    Global Equity, Global Focus and International Equity funds;

2.    UK Equity, UK Focus and UK Income funds;

3.    US Equity Fund;

4.    Global long/short funds (the Tortoise funds); and

5.    The Edinburgh Investment Trust plc and Majedie Investments plc,

(collectively the "Funds") and provide investment management and advisory services to a number of institutional segregated portfolios ("Segregated Accounts").

John Ions, Chief Executive of Liontrust, said: "Majedie is an important acquisition for Liontrust because of its strong presence and reputation in the institutional market. Liontrust has been increasing our number of institutional clients and the purchase of Majedie will hasten this expansion by enhancing our investment capability and client service credentials.

"We have been very impressed by the Majedie investment management team. They are an experienced team with a robust investment process that is reflected in their excellent long-term performance. This is demonstrated by the quality of Majedie's institutional mandates and the fact they were appointed by The Edinburgh Investment Trust in 2020.

"Majedie has strong client relationships that have been built up over many years and an impressive quality of client service that will reinforce our own.

"Given the growing demand from institutional investors for global equity managers, we believe we can expand this client base further for the Majedie investment team, as well as take advantage of Majedie's institutional expertise.

"The quality of the Majedie investment team, their strong client relationships and service combined with Liontrust's sales, marketing, brand and communications gives me great confidence we will grow the institutional business and Majedie's funds over the next few years."

Rob Harris, Chief Executive Officer of Majedie, said: "This is an exciting day for everyone at Majedie and for our clients. We have worked hard to build an enviable performance track record spanning almost 20 years, and the acquisition by Liontrust provides a compelling strategic and cultural fit, with a deeply ingrained focus by both firms on rigorous investment processes, a commitment to responsible capitalism and first-class client service.

"Our strength in the institutional market, combined with Liontrust's impressive sales and marketing capabilities, will enhance distribution for our investment team and offer a resilient, long-term proposition for our clients. Together, we will offer a fully resourced, best of breed fund management capability which is true to our heritage and ready to embrace the future with its myriad challenges and opportunities.

"It was very important that our existing clients would be unaffected through the management of their investments and the service they receive. This is being delivered, with no changes to the Majedie investment team who will continue managing accounts and funds to the same investment process as before the acquisition.

"We thank all of our clients for their support and confidence in Majedie over the past two decades. We are now focused on ensuring there is a seamless transition to Liontrust over the next few months and a strong foundation from which to continue to deliver for clients over the years ahead."   

Information on Majedie

Majedie is a specialist, active equities boutique with a leading UK equities heritage and outstanding long-term investment track record. The company has AuMA of £5.8 billion across a range of UK and international equity strategies with longstanding incorporation of Responsible Capitalism comprising an evidence-based ESG research and integration process. Founded by the Mercury Asset Management UK Alpha Team in 2002, they have established top decile UK equities capabilities and a top quartile track record in US and Global equities. Majedie has a leading reputation among consultants, institutional and intermediated retail clients for its long-term investment record and high-quality service. It has a strong client base, diversified by type and distribution channel.

Majedie has an investment-led culture with a team-based approach, carefully managed capacity, and a sole focus on investment performance. Majedie is well positioned for the recalibration of the UK market's outlook, with a flexible investment process, and a highly scalable platform and available capacity to manage significantly higher levels of assets.

The Majedie AuMA relating to the Funds and the Segregated Accounts as at close of business on 30 November 2021 (being the latest practicable date prior to the date of this announcement) was £5,825 million, broken down as follows: 

Source: Majedie. 

Key UK & Irish Fund Performance (Quartile ranking)

Source: Morningstar/Majedie to 31 October 2021 as at 24 November 2021, bid-bid, total return, net of fees, based on primary share classes. Past performance is not a guide to future performance, investments can result in total loss of capital. The above funds are all UK authorised ICVCs or Irish OEICs (primary share class).

Background to and reasons for the Proposed Acquisition

The Proposed Acquisition is in-line with Liontrust's stated goal of using acquisitions to diversify our product range and accelerate our growth strategy.

Majedie has developed a substantial presence as a specialist equity boutique in the institutional market and has relationships with 66 clients in this space².

The Majedie Fund Management Team will become Liontrust's seventh investment team: Global Fundamental.  The funds will be rebranded as Liontrust and become a core part of our offering to our increasingly diverse client base. In keeping with the success we have seen with prior acquisitions, the Board believes Liontrust offers a great platform from which to grow Majedie's client assets over the next few years.

Acquiring Majedie will significantly improve Liontrust's position in the UK institutional market and the enlarged scale will benefit consultants and their clients.

In keeping with our corporate objective of providing the best environment for fund managers to be investors, the Proposed Acquisition will free up the Majedie Fund Management Team to focus wholly on portfolio management and research. In addition, Liontrust's sales and marketing team of 64 will be able to promote the Global Fundamental team with more resources and focus and the Board's expectation is that Majedie's funds will be well received by UK wealth managers and financial advisers where we have a strong presence.

Majedie is predominantly owned by its employees who will become shareholders in Liontrust upon Completion. This provides both a retention and motivation incentive that aligns the interests of our clients and shareholders with our employees.

² Source: Majedie.

Details of the Proposed Acquisition

The Company has conditionally agreed to acquire the entire issued share capital of Majedie for a Consideration of up to £120 million consisting of:

·   £80 million satisfied through the issue of 3,683,241 new Ordinary Shares to Majedie Shareholders at Completion ("Initial Consideration Shares")

·    Up to £8.3 million, with up to £5.3 million being satisfied with the issue of 244,014 new Ordinary Shares ("Excess NAV Shares") and up to £3.0 million in cash to be issued when the net asset value of Majedie is agreed, to Majedie Shareholders ("Excess NAV");

·  Up to £11.7 million satisfied through the issue of 538,674 new Ordinary Shares ("Conditional Consideration Shares") to Majedie Shareholders within 30 business days of 30 June 2025 dependent on minimum AuMA for the period from Completion to 31 March 2023 and performance fees earned for the period from Completion to 31 March 2025; and

·   Up to £20 million satisfied in cash ("Pipeline Consideration") to be paid to Majedie Shareholders dependent on achieving certain institutional growth targets from their existing new business pipeline over a period of up to three years.

The Initial Consideration Shares, Excess NAV Shares and Conditional Consideration Shares are to be issued at a price of 2,172p per Ordinary Share, being the 30-day average closing price to 3 December 2021.

The new Ordinary Shares issued to Majedie Shareholders will be subject to a staggered three year lock up commencing from the date of issue (one third released at one year, two years and three years after issuance), subject to certain customary exemptions. The aggregate of the Initial Consideration Shares, Excess NAV Shares and Conditional Consideration Shares represent approximately 6.80 per cent. of the share capital of Liontrust, as enlarged by the Proposed Acquisition, and assuming no subsequent dilutive share issues (e.g. pursuant to the exercise of share options).

The Proposed Acquisition is conditional upon obtaining applicable regulatory approvals and to the SPA in respect of the Proposed Acquisition becoming unconditional in all respects and not having been terminated in accordance with its terms prior to Completion.  Completion is expected to take place in April 2022.

Financial effects

Audited gross and net assets of Majedie as at 30 September 2020 were £90.6 million and £45.7 million respectively, although it is intended that surplus capital will be paid to Majedie Shareholders before Completion. The audited revenue and profit before tax for Majedie for the year ended 30 September 2020 were £46.9 million (including £2.3 million of performance fees) and £16.3 million, respectively.  As at 30 November 2021, Majedie's run rate management and advisory fee revenues are £29.1 million³.

The Proposed Acquisition and subsequent integration of Majedie will require the Company to incur transaction costs of approximately £4.1 million and re-organisation costs of approximately £7.0 million which will be treated as exceptional items to be incurred in the financial years ending 31 March 2022 and 31 March 2023. Following completion of the integration process the Board expects Majedie will, before transaction and re-organisation costs, achieve operating margins broadly in line with the existing Liontrust business. Accordingly, we expect the Proposed Acquisition to be earnings enhancing with regards to our adjusted diluted earnings per share for the financial year ending 31 March 2023 and in future years. 

³ Source: Majedie. The run rate management and advisory fee revenues calculated as October 2021 net management and advisory fees collected or accrued, multiplied by twelve and then adjusted for the change in Majedie AuMA between end October and end November, and excludes performance fee revenues.

Liontrust was supported in its due diligence by Alpha Financial Markets Consulting UK Plc, the audit, tax and consultancy firm RSM, and Simmons & Simmons LLP.

For further information please contact:

Liontrust Asset Management Plc (Tel: 020 7412 1700, Website: liontrust.co.uk)

John Ions: Chief Executive

Vinay Abrol: Chief Financial Officer & Chief Operating Officer

Simon Hildrey: Chief Marketing Officer

David Boyle: Head of Corporate Development

Singer Capital Markets (Tel: 020 7496 3000)

Corporate Broking: Tom Salvesen

Corporate Finance: Stephen Howard, Justin McKeegan, Asha Chotai

Panmure Gordon (Tel: 020 7886 2500)

Corporate Broking: Charles Leigh-Pemberton

Corporate Advisory: Antoine Dupont-Madinier

Forward-looking statements

This announcement may include statements that are or may be deemed to be forward-looking statements. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "envisages", "plans", "projects", "anticipates", "targets", "aims", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions and include, but are not limited to the ability of the parties to consummate the proposed acquisition on a timely basis or at all, the ability of the parties to satisfy the conditions precedent to consummation of the proposed acquisition, including the ability to secure the required regulatory approvals on the terms expected, at all or in a timely manner, the ability of Liontrust to successfully integrate Majedie's operations, and the ability of Liontrust to implement its plans, forecasts and other expectations with respect to Majedie's business after the completion of the proposed acquisition. These forward-looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Liontrust's and Majedie's current views with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Liontrust's or Majedie's results of operations, financial position, liquidity, prospects, growth or strategies and the industries in which they operate. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, Liontrust and Majedie disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in their expectations or to reflect events or circumstances after the date of this announcement.

Completion of the proposed acquisition is subject to the satisfaction of several conditions as more fully described in this announcement. Consequently, there can be no certainty that the completion of the proposed acquisition will be forthcoming.

Certain figures contained in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform precisely with the total figure given.  

Except as explicitly stated in this announcement, none of the contents of Liontrust's or Majedie's websites, nor any website accessible by hyperlinks on Liontrust's or Majedie's websites, is incorporated in or forms part of, this announcement.

ENDS