LONDON: Quilter Plc has entered into an agreement with Utmost Holdings Isle of Man Limited, a subsidiary of Utmost Group Limited with respect to the sale of Quilter International, which is comprised of Quilter’s entire shareholding in Quilter International Holdings Limited and Quilter International Ireland dac.
TRANSACTION HIGHLIGHTS:
· Proposed sale of Quilter International to Utmost (the “Sale”), following a detailed strategic review. The Sale is unanimously agreed by the Quilter Board to be in the best interests of shareholders, taken as a whole, and is expected to support the continued delivery of good outcomes for customers and other stakeholders.
· Total consideration for the Sale is anticipated to be approximately £483 million, inclusive of a 5% interest charge on the base consideration of £460 million from 1 January 2021 to Completion of the Sale (“Completion”) (assuming Completion at 31 December 2021), implying a price to 2020 Solvency II Own Funds multiple of 0.84x.
· Completion of the Sale is expected to occur around end-2021, conditional on Quilter shareholder approval, customary regulatory approvals in the Isle of Man, Ireland, Hong Kong, Singapore and the Dubai International Financial Centre, and anti-trust approval from the European Commission.
STRATEGIC BENEFITS FOR QUILTER:
· The Sale will simplify Quilter and focus the Group on its higher growth UK wealth management business. From the beginning of 2022 Quilter will target annualised Net Client Cash Flow (“NCCF”) growth of at least 6 percent of opening AuMA in the medium term, an increase from the Group’s previous 5 percent per annum target reflecting the revised corporate perimeter which will exclude the lower growth Quilter International business.
· Quilter expects to deliver a standalone operating margin of at least 25% in 2023 and at least 30% by 2025, after absorbing stranded costs and subject to normal market conditions. A portion of the net cash proceeds from the Sale are expected to be utilised to accelerate selected growth and optimisation initiatives to enhance revenue and support cost reductions.
· The Group will provide further detail of its UK focused growth strategy and financial targets at a Capital Markets Day expected to be held during the fourth quarter of 2021.
CAPITAL DISCLIPLINE AND USE OF PROCEEDS:
Quilter remains committed to capital discipline which has been demonstrated through meaningful shareholder distributions following divestments of Quilter Life Assurance and Old Mutual Global Investors.
· Net cash proceeds of approximately £450 million are expected from the Sale after allowing for transaction costs.
o An allocation from these net cash proceeds is expected to be applied as a contribution from Quilter International to Quilter’s Full Year 2021 dividend on a pro rata basis to earnings for calendar 2021.
o Further, the Board of Quilter is currently minded to undertake a capital distribution to shareholders of the majority of the net cash proceeds. A final decision on quantum and mechanism of distribution will be made at the time of Completion of the sale, after taking account of prevailing market and business conditions, as well as potential opportunities for business investment.
o Quilter will continue to engage with its shareholders on the range of strategic growth opportunities available to the Group and the optimum means of returning capital prior to reaching any conclusions in this regard. Any such distribution will be subject to normal regulatory approvals.
o The residual portion of the net cash proceeds from the Sale are expected to be used to fund selected growth initiatives and accelerate the next phase of optimisation, supporting revenue enhancement and further cost reductions, and thereby delivering operating margin improvements.
· Quilter will recommence the return of the residual £200 million Quilter Life Assurance sale proceeds, with an initial tranche of £50 million of the next £100 million of regulatory approved buyback expected to commence shortly.
Paul Feeney, Chief Executive of Quilter, said: “Following a detailed strategic review, we are delighted to announce the proposed sale of Quilter International to Utmost which represents an attractive valuation for our shareholders and an excellent outcome for all stakeholders. It allows us to focus on accelerating our growth and efficiency plans as well as further simplifying and focusing our business around its core UK high net worth and affluent customer proposition. It also gives us the ability to deliver a further meaningful capital distribution to shareholders. With the recent completion of our platform transformation programme, we are set up for strong growth.
I would like to thank all our Quilter International colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of such a strong franchise. I am confident that the agreement we have reached with Utmost will ensure the continued success of the business, with a focus on delivering good customer outcomes, as well as providing a range of career opportunities for Quilter International’s employees within an enlarged international business.”
Paul Thompson, Chief Executive of Utmost, said: “This is a highly attractive acquisition for Utmost and underscores the importance of our Utmost International business. Quilter International is highly complementary to our existing International business from both an operational, product and distribution perspective.
I look forward to welcoming all the staff, customers and distribution partners to our Group. We are delighted to work with Quilter on this transaction and look forward to a productive partnership in the future.”
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