Principle Capital has entered into a conditional subscription agreement with the Sanlam Group, a financial services group in South Africa, and certain members of the company’s management team, pursuant to which these investors will initially subscribe GBP4m for 26,666,666 ordinary shares at a price of 15 pence per share.
As part of the initial investment, it is proposed that the nominal value of each of the ordinary shares will be reduced from GBP1.00 to GBP0.01 and that the admission to trading on AIM of the ordinary shares will be cancelled.
Principle Capital says that forming a strategic relationship with the Sanlam Group will assist it in expanding its emerging market alternative asset management business, particularly in Africa and India, and developing further its private client trust and fund administration business.
There will be an initial injection of GBP4m into Principle Capital to develop the business and, subject to certain fundraising and cost saving conditions being met, the Sanlam Group and the other investors have committed a second tranche of GBP4m for the further development of the business.
In order to provide shareholders of the company with the opportunity to participate in the investment, the company will make an open offer to eligible shareholders prior to the completion of the initial investment.
The proceeds of the transaction will be used primarily for the launch of new alternative investment products focused on Africa and India, expansion of the company’s product distribution capability and the expansion of Silex, the company’s private client trust and administration business.
These proposals are subject to shareholder approval and the directors have convened an EGM to be held on 19 May 2010.
Jonathan Sieff, chief executive of Principle Capital, says: “We are delighted to be able to accelerate the growth of the business by forming this strategic relationship with one of the leading financial services groups in South Africa and which is rapidly growing its interests elsewhere in Africa. The transaction will allow the company to take advantage of opportunities that have emerged from the market dislocation over the past two years and, through the open offer, existing shareholders will also be able to participate in the investment. Consequently, the board believes that the resolutions which will be proposed at the upcoming EGM are in the best interests of the company and shareholders and is able to recommend that shareholders vote in favour of these resolutions."