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INL/INP - Investec Limited/Investec plc - Recommended Share Offer for The
Evolution Group Plc ("Evolution") by Investec plc ("Investec")
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE share code: INL
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE share code: INP
ISIN: GB00B17BBQ50
(jointly "Investec")
As part of the dual listed company structure, Investec plc and Investec
Limited notify both the London Stock Exchange and the JSE Limited of
matters which are required to be disclosed under the Disclosure,
Transparency and Listing Rules of the United Kingdom Listing Authority
(the "UKLA") and/or the JSE Listing Requirements.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN,
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OF SUCH JURISDICTION
9 September 2011
Recommended Share Offer for The Evolution Group Plc ("Evolution") by
Investec plc ("Investec")
Summary
* The Evolution Directors and the Investec Directors are pleased to
announce that they have reached agreement on the terms of a
recommended offer under which Investec will acquire the entire
issued ordinary share capital of Evolution (the "Offer"). It is
intended that the Offer will be implemented by way of a Court
sanctioned scheme of arrangement under Part 26 of the Companies Act.
* Under the terms of the Offer, Evolution Shareholders will, in
aggregate, receive approximately 53.8 million new Investec Shares.
On the basis of the prevailing mid-market price of an Investec
Share, being 433.5 pence, at the time the Evolution Directors agreed
in principle to give their recommendation, the Offer values the
entire issued share capital of Evolution at GBP233.2 million.
* Accordingly, Evolution Shareholders will receive 0.23124 new
Investec Shares in exchange for each Evolution Share they hold
which, on the above basis, equates to a value of 100.24 pence per
Evolution Share.
* The value of 100.24 pence for each Evolution Share represents a
premium of approximately 44.7 per cent. to the average closing mid-
market price per Evolution Share over the three month trading period
to 2 August 2011 of 69.2 pence (being the last Business Day prior to
the commencement of the offer period).
* Investec has obtained letters of intent from Blackrock Investment
Managers (UK) Limited and Majedie Asset Management to vote in favour
of the Scheme and the resolutions to be proposed at the Court
Meeting and to vote in favour of the General Meeting Resolutions in
respect of their respective holdings of 20,935,457 and 6,266,555
Evolution Shares representing, in aggregate, approximately 11.7 per
cent. of the existing issued share capital of Evolution. Investec
also expects to receive a letter of intent from Aberforth Partners
who hold approximately 11.8 per cent. of the issued share capital of
Evolution.
* No dividends shall be paid by Evolution between the date of this
announcement and the Effective Date save for the interim dividend of
1 pence per Evolution Share announced on 29 July 2011 and payable to
shareholders on the register on 12 August 2011.
* The new Investec Shares to be issued to Evolution Shareholders
pursuant to the Offer will on issue rank pari passu in all respects
with the existing Investec Shares.
* Investec is an international, specialist bank and asset manager that
provides a diverse range of financial products and services to a
select client base and is a constituent of the FTSE 100 Index.
* The Evolution Group Plc primarily comprises two divisions:
- Williams de Broe is one of the UK`s leading private client
investment managers, with a heritage dating back to 1869. The
company provides a range of discretionary and advisory
services, with assets under management of approximately GBP6.0
billion as at 30 June 2011. As announced on 8 August 2011
Williams de Broe has agreed to acquire BNP Paribas Private
Investment Management Limited which as at 30 June 2011 had
assets under management of approximately GBP1.8 billion; and
- Evolution Securities is a leading investment bank focused on
serving an international institutional corporate client base,
specialising in the UK and European equity and debt markets.
Services include equity and fixed income research,
institutional sales and trading, equity market making, debt
capital markets and equity corporate finance and corporate
broking.
* The Evolution Directors, who have been so advised by Credit Suisse,
consider the terms of the Offer to be fair and reasonable. In
providing advice to the Evolution Directors, Credit Suisse has taken
into account the commercial assessments of the Evolution Directors.
In addition, the Evolution Directors consider the terms of the Offer
to be in the best interests of Evolution Shareholders as a whole.
Accordingly, the Evolution Directors intend to recommend unanimously
that Evolution Shareholders vote in favour of the Scheme at the
Court Meeting and in favour of the General Meeting Resolutions, as
they have irrevocably undertaken to do themselves in respect of
their own beneficial holdings of 6,027,184 Evolution Shares
(representing as at the date of this announcement, in aggregate,
approximately 2.59 per cent. of the existing issued share capital of
Evolution).
* The Offer is conditional, among other things, on certain regulatory
conditions being fulfilled to the reasonable satisfaction of
Investec, the passing of resolutions by Evolution Shareholders and
the sanction of the Court.
* It is expected that the Scheme Document will be posted to Evolution
Shareholders within 28 days of this announcement and the Court
Meeting and General Meeting are expected to take place in the second
half of November 2011. Further details will be set out in the Scheme
Document.
Commenting on the Offer, Alex Snow, Chief Executive of Evolution, said:
"Investec`s offer provides shareholders with a very attractive valuation
for their investment in Evolution and the opportunity to remain invested
in a well-capitalised specialist financial institution. Investec is an
excellent home for the two main businesses within Evolution providing an
excellent cultural fit for both employees and clients. Williams de Broe
will be able to maintain its growth and continue to provide its clients
with a best in class independent wealth management service. Evolution
Securities will benefit from being part of a larger well-capitalised
investment bank with a strategy to be the leading mid-market investment
bank in the UK."
Commenting on the Offer, Stephen Koseff, Chief Executive of Investec,
said:
"This fits very well with our strategy to build non-lending revenues. The
group has seen strong growth in third party assets under management and
the acquisition of Evolution will add further momentum. The transaction
strengthens our position in the UK, giving us greater scale in both
private client wealth management and investment banking."
Commenting on the Offer, Bernard Kantor, Managing Director of Investec,
said:
"This is a good deal for the shareholders of both companies and we are
delighted to have reached agreement with the Board of Evolution. Investec
has built a strong platform in the UK and we expect the businesses we are
acquiring to thrive as part of the group."
Enquiries:
Investec
Ursula Nobrega +44 (20) 7597 5546
Stephen Koseff
Bernard Kantor
Evolution
Alex Snow +44 (20) 7071 4300
Investec Investment Banking (Financial
Adviser and Joint Corporate Broker to
Investec)
David Currie +44 (20) 7597 5970
Christopher Baird
James Ireland
Credit Suisse (Financial Adviser to
Evolution)
George Maddison +44 (20) 7888 8888
Tom Ng
Joe Hannon
Citigate Dewe Rogerson (Financial PR to
Investec)
Tom Baldock +44 (20) 7638 9571
Justin Griffiths
Pelham Bell Pottinger (Financial PR to
Evolution)
Victoria Geoghegan +44 (20) 7861 3925
The Offer will be made on the terms and subject to the conditions and
further terms set out herein in Appendix I to this announcement and the
further terms and conditions set out in the Scheme Document and Forms of
Proxy when issued. The bases and sources of certain financial information
contained in this announcement are set out in Appendix II to this
announcement. A summary of the irrevocable undertakings given by the
Evolution Directors and letters of intent received from Evolution
Shareholders is contained in Appendix III to this announcement. Certain
terms used in this announcement are defined in Appendix IV to this
announcement.
Investec Investment Banking, a division of Investec Bank plc, which is
authorised and regulated in the UK by the Financial Services Authority,
is acting for Investec and no one else in connection with the Offer and
this announcement and will not be responsible to anyone other than
Investec for providing the protections afforded to clients of Investec
Investment Banking or for providing advice in connection with the Offer
or any matter referred to herein.
Credit Suisse, which is authorised and regulated in the UK by the
Financial Services Authority, is acting exclusively for Evolution and no
one else in connection with the Offer and this announcement and will not
be responsible to anyone other than Evolution for providing the
protections afforded to clients of Credit Suisse or for providing advice
in connection with the Offer or any matter referred to herein.
This announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase any securities
or the solicitation of an offer to buy any securities, pursuant to the
Offer or otherwise. The Offer will be made solely by means of the Scheme
Document, which will contain the full terms and conditions of the Offer,
including details of how to vote in favour of the Scheme. Evolution will
prepare the Scheme Document to be distributed to Evolution Shareholders.
Evolution and Investec urge Evolution Shareholders to read the Scheme
Document when it becomes available because it will contain important
information in relation to the Offer.
This announcement does not constitute a prospectus or prospectus
equivalent document.
This announcement has been prepared for the purpose of complying with
English law and the City Code and the information disclosed may not be
the same as that which would have been disclosed if this announcement had
been prepared in accordance with the laws of jurisdictions outside the
United Kingdom.
The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law. Persons who are not resident in
the United Kingdom or who are subject to other jurisdictions should
inform themselves of, and observe, any applicable requirements.
Unless otherwise determined by Investec or required by the City Code, and
permitted by applicable law and regulation, the Offer will not be made,
directly or indirectly, in, into or from a Restricted Jurisdiction where
to do so would violate the laws in that jurisdiction, and the Offer will
not be capable of acceptance from or within a Restricted Jurisdiction.
Accordingly, copies of this announcement and all documents relating to
the Offer are not being, and must not be, directly or indirectly, mailed
or otherwise forwarded, distributed or sent in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that jurisdiction,
and persons receiving this announcement and all documents relating to the
Offer (including custodians, nominees and trustees) must not mail or
otherwise distribute or send them in, into or from such jurisdictions as
doing so may invalidate any purported acceptance of the Offer.
The availability of the Offer to Evolution Shareholders who are not
resident in the United Kingdom may be affected by the laws of the
relevant jurisdictions in which they are resident. Persons who are not
resident in the United Kingdom should inform themselves of, and observe,
any applicable requirements. Further details in relation to overseas
shareholders will be contained in the Scheme Document.
The Offer relates to the shares in an English company and is proposed to
be made by means of a scheme of arrangement provided for under company
law of the United Kingdom. The scheme of arrangement will relate to the
shares of a UK company that is a `foreign private issuer` as defined
under Rule 3b-4 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). A transaction effected by means of a scheme of
arrangement is not subject to the proxy and tender offer rules under the
Exchange Act. Accordingly, the Offer is subject to the disclosure
requirements and practices applicable in the UK to schemes of
arrangement, which differ from the disclosure requirements of the US
proxy and tender offer rules. Financial information included in the
relevant documentation will have been prepared in accordance with
accounting standards applicable in the UK that may not be comparable to
the financial statements of US companies.
Any securities to be offered pursuant to the Offer as described in this
announcement have not been and will not be registered under the US
Securities Act of 1933, as amended (the "Securities Act"), or under the
securities laws of any state, district or other jurisdiction of the
United States, or of Australia, Canada or Japan. Accordingly, such
securities may not be offered, sold or delivered, directly or indirectly,
in or into such jurisdictions except pursuant to exemptions from
applicable requirements of such jurisdictions. It is expected that the
Investec Shares to be issued in the Scheme will be issued in reliance
upon the exemption from the registration requirements of the Securities
Act provided by Section 3(a)(10) thereof. Under applicable US securities
laws, persons (whether or not US persons) who are or will be "affiliates"
(within the meaning of the Securities Act) of Evolution or Investec prior
to, or of Investec after, the Effective Date will be subject to certain
transfer restrictions relating to the Investec Shares received in
connection with the Scheme.
If Investec exercises its right to implement the Offer by way of a
Takeover Offer, the Offer will be made in compliance with applicable US
laws and regulations, including applicable provisions of the tender offer
rules under the Exchange Act, to the extent applicable.
Forward Looking Statements
This announcement contains statements about Investec and Evolution that
are, or may be, forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements preceded
or followed by or that include the words "targets", "plans", "believes",
"expects", "aims", "intends", "will", "may", "anticipates", "estimates",
"projects" or words or terms of similar substance or the negative
thereof, are forward looking statements. Forward looking statements
include statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses
and future prospects; (ii) business and management strategies and the
expansion and growth of Investec`s or Evolution` operations and potential
synergies resulting from the Offer; and (iii) the effects of government
regulation on Investec`s or Evolution` business.
Such forward looking statements involve risks and uncertainties that
could significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially
from those projected or implied in any forward looking statements. Due to
such uncertainties and risks, readers are cautioned not to place undue
reliance on such forward looking statements, which speak only as at the
date hereof. Investec and Evolution disclaim any obligation to update any
forward looking or other statements contained herein, except as required
by applicable law.
Dealing Disclosure Requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more
of any class of relevant securities of an offeree company or of any paper
offeror (being any offeror other than an offeror in respect of which it
has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of
the offer period and, if later, following the announcement in which any
paper offeror is first identified. An Opening Position Disclosure must
contain details of the person`s interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any paper offeror(s). An Opening Position
Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than
3.30 pm (London time) on the 10th business day following the announcement
in which any paper offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a paper offeror
prior to the deadline for making an Opening Position Disclosure must
instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested
in 1% or more of any class of relevant securities of the offeree company
or of any paper offeror must make a Dealing Disclosure if the person
deals in any relevant securities of the offeree company or of any paper
offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person`s interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any paper offeror, save to the extent that these
details have previously been disclosed under Rule 8. A Dealing Disclosure
by a person to whom Rule 8.3(b) applies must be made by no later than
3.30 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper offeror,
they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and
by any offeror and Dealing Disclosures must also be made by the offeree
company, by any offeror and by any persons acting in concert with any of
them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be
made can be found in the Disclosure Table on the Takeover Panel`s website
at www.thetakeoverpanel.org.uk, including details of the number of
relevant securities in issue, when the offer period commenced and when
any offeror was first identified. If you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a Dealing
Disclosure, you should contact the Panel`s Market Surveillance Unit on
+44 (0) 20 7638 0129.
This summary should be read in conjunction with the full text of this
announcement. Appendix I to this announcement contains the conditions to,
and certain further terms of, the Offer. Appendix II to this announcement
contains further details of the sources of information and bases of
calculations set out in this announcement. Appendix III contains a
summary of the irrevocable undertakings given by the Evolution Directors
and letters of intent provided by Evolution Shareholders and Appendix IV
contains definitions of certain expressions used in this summary and in
this announcement.
Publication on Website and availability of Hard Copies
A copy of this announcement will be made available, free of charge, at
www.investec.com and www.evgplc.com by no later than 12 noon (London
time) on 12 September 2011.
You may request a hard copy of this announcement, free of charge, by
contacting the Company Secretaries of Evolution on +44 (20) 7071 4300 and
Investec on +44 (20) 7597 4000.You may also request that all future
documents, announcements and information to be sent to you in relation to
the Offer should be in hard copy form.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN,
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OF SUCH JURISDICTION
9 September 2011
RECOMMENDED SHARE OFFER for The Evolution Group Plc ("Evolution") By
Investec plc ("Investec")
1 Introduction
The Evolution Directors and the Investec Directors are pleased to
announce that they have reached agreement on the terms of a
recommended offer under which Investec will acquire the entire
issued ordinary share capital of Evolution (the "Offer").
2 The Offer
It is intended that the Offer will be implemented by way of a Court
sanctioned scheme of arrangement under Part 26 of the Companies Act.
Under the terms of the Offer, Evolution Shareholders will, in
aggregate, receive approximately 53.8 million fully paid newly
issued Investec Shares. On the basis of the prevailing share price
of Investec, being 433.5 pence, at the time the Evolution Directors
agreed in principle to give their recommendation, the Offer values
the entire issued share capital of Evolution at GBP233.2 million.
Accordingly, Evolution Shareholders will receive 0.23124 new
Investec Shares in exchange for each Evolution Share they hold
which, on the above basis, equates to a value of 100.24 pence per
Evolution Share.
The value of 100.24 pence for each Evolution Share represents a
premium of approximately 44.7 per cent. to the average closing mid-
market price per Evolution Share, of 69.2 pence, over the three
month trading period to 2 August 2011 (being the last Business Day
prior to the commencement of the offer period).
No dividends shall be paid by Evolution between the date of this
announcement and the Effective Date save for the interim dividend of
1 pence per Evolution Share announced on 29 July 2011 and payable to
shareholders on the register on 12 August 2011.
The new Investec Shares to be issued to Evolution Shareholders
pursuant to the Offer will on issue rank pari passu in all respects
with the existing Investec Shares.
The new Investec Shares to be issued under the Scheme are expected
to represent approximately 9.02 per cent. of the issued share
capital of Investec and approximately 6.17 per cent. of the combined
issued share capital of Investec and Investec Limited, in each case
as enlarged by the acquisition of Evolution.
The new Investec Shares will be issued on the Scheme becoming
effective to Evolution Shareholders on the register at the close of
business at the Scheme Record Time.
Fractions of new Investec Shares will not be allotted or issued
pursuant to the Offer and will be disregarded.
It is expected that the Scheme Document will be posted to Evolution
Shareholders within 28 days and the Court Meeting and General
Meeting are expected to take place in the second half of November
2011. Further details will be set out in the Scheme Document.
3 Background to and reasons for the Offer
As a specialist bank and asset manager, the Investec Group has
focused on developing a balanced and diversified portfolio of
businesses serving the needs of select market niches where it can
compete effectively. The Investec Group`s private client investment
management and asset management activities have developed strongly
over the past few years and are core components of its business
model.
The Investec Group seeks to maintain an appropriate balance between
revenue earned from operational risk businesses and revenue earned
from financial risk businesses. This ensures that the Investec Group
is not over-reliant on any one part of its business to sustain its
activities and that it has a large recurring revenue base that the
directors of Investec believe enable it to better navigate through
varying cycles and to support its long-term growth objectives. The
acquisition is supportive of these long-term growth objectives.
The Investec Group`s current strategic objectives include increasing
the proportion of its non-lending revenue base. Against this
background, the Investec Group intends to continue to strengthen and
develop its private client investment management and asset
management platforms.
Evolution`s principal operating activities comprise a private client
investment management division and an investment banking division.
As at 30 June 2011, Evolution had net tangible assets of GBP108.8
million, which included cash and cash equivalents of GBP73.7
million, and assets under management of GBP6.0 billion. Subsequent
to that date, Evolution announced it had reached agreement to
acquire BNP Paribas Private Investment Management Limited which, as
at 30 June 2011, had assets under management of approximately GBP1.8
billion.
Investec has grown its private client investment management and
wealth management operations over many years, most recently with the
acquisition in 2010 of the 53% stake in Rensburg Sheppards plc not
already owned by it having held 47% and had a close working
relationship with the business over the previous 5 years. The
business is now branded as Investec Wealth & Investment with assets
under management at 31 March 2011 of GBP14.9 billion in the UK as
well as having an international reach and forming one of the core
pillars of the global Investec Group. The acquisition of Evolution
is designed to create a major UK player in the private client
investment management industry that would benefit from increased
resources and expertise and enjoy further economies of scale. There
is a strong geographic fit between the two businesses, with
Evolution`s UK footprint adding to Investec`s existing UK network
through its offices in Birmingham and the South-West of England.
Investec believes that it is a well-known and respected business,
and that this will be reassuring to Williams de Broe`s clients and
its employees following completion of the transaction and subsequent
integration.
Investec has grown its UK Investment Banking operations considerably
since the acquisition of Guinness Mahon Holdings PLC in 1998. The
business offers a full service mid-market investment banking
capability comprising both corporate finance and securities, acting
for corporate and institutional clients. It has 90 retained UK
listed corporate clients of which 24 are in the FTSE 250, publishes
research on 309 UK listed groups, makes markets in c.200 stocks and
in June 2011 was ranked No.1 Small and Mid-Cap and No.2 in the UK
brokerage Extel awards. The division increasingly benefits from the
capabilities of Investec UK`s Capital Markets division. The
acquisition of Evolution`s equities, corporate finance, fixed income
and debt advisory activities is designed to augment the existing
operations to provide a stronger combined investment banking
operation.
Investec believes that the Offer represents a compelling strategic
fit and that the combination of Investec`s existing private client
investment management business with that of Williams de Broe will
create a stronger platform, allowing it to significantly enhance its
market position. Furthermore, there is great potential to generate
longer term value for the combined business and its employees.
Investec also believes a combination of Evolution Securities with
Investec Investment Banking will contribute to its existing strategy
to be the leading mid-market investment bank in the UK.
4 Recommendation
The Evolution Directors, who have been so advised by Credit Suisse,
consider the terms of the Offer to be fair and reasonable. In
providing advice to the Evolution Directors, Credit Suisse has taken
into account the commercial assessments of the Evolution Directors.
In addition, the Evolution Directors consider the terms of the Offer
to be in the best interests of Evolution Shareholders as a whole.
Accordingly, the Evolution Directors intend to recommend unanimously
that Evolution Shareholders vote in favour of the Scheme at the
Court Meeting and in favour of the General Meeting Resolutions, as
they have irrevocably undertaken to do themselves in respect of
their own beneficial holdings of 6,027,184 Evolution Shares
(representing as at the date of this announcement, in aggregate,
approximately 2.59 per cent. of the existing issued share capital of
Evolution).
5 Background to and reasons for the recommendation
Evolution has delivered a decade of growth, both organic and through
value creating acquisitions. Over the last 10 years, revenues have
increased by over GBP102 million from GBP7.2 million for the year
ended 2001 to GBP109.5 million for the year ended 2010 (a compound
annual growth rate of 35.3 per cent.). Assets under management have
grown by over GBP5.4 billion to GBP5.8 billion over the same period
(a compound annual growth rate of 34.6 per cent.). There has been an
increased dividend payment each year.
The Evolution Board believes that the Offer represents an
opportunity for Evolution Shareholders to realise an immediate and
attractive premium of approximately 36.4 per cent. to the closing
mid-market price per Evolution Share, of 73.5 pence on 2 August 2011
(being the last Business Day prior to the commencement of the offer
period). The Offer allows shareholders to participate in the
potential upside and opportunities from a combination with Investec
as well as providing an interest in a more liquid FTSE 100 security.
In addition, the Evolution Board believes that employees and clients
will benefit from being part of a leading international specialist
bank and asset manager. As such, the Evolution Board intends to
recommend unanimously that Evolution Shareholders vote in favour of
the Offer.
6 Irrevocable undertakings and letters of intent
Investec has received irrevocable undertakings from each of the
Evolution Directors to vote or procure the vote in favour of the
resolutions to be proposed at the Court Meeting and the General
Meeting in respect of their own beneficial holdings of 6,027,184
Evolution Shares, representing approximately 2.59 per cent. of the
existing issued share capital of Evolution. The undertakings given
by the Evolution Directors cease to be binding if the Scheme is
withdrawn or lapses, unless Investec exercises its right to announce
a Takeover Offer for the entire issued share capital of Evolution,
not already owned by it, in which case it shall cease to have effect
on the withdrawal or lapsing of the Takeover Offer.
Investec has obtained letters of intent from Blackrock Investment
Managers (UK) Limited and Majedie Asset Management to vote in favour
of the Scheme and the resolutions to be proposed at the Court
Meeting and to vote in favour of the General Meeting Resolutions in
respect of their respective holdings of 20,935,457 and 6,266,555
Evolution Shares representing, in aggregate, approximately 11.7 per
cent. of the existing issued share capital of Evolution. Investec
also expects to receive a letter of intent from Aberforth Partners
who hold approximately 11.8 per cent. of the issued share capital of
Evolution.
Further details of these irrevocable undertakings and the letters of
intent are set out in Appendix III to this announcement.
7 Information on the Investec Group
The Investec Group is an international specialist bank and asset
manager that provides a diverse range of financial products and
services to a select client base. It was founded as a leasing
company in Johannesburg in 1974, acquired a banking licence in 1980
and was listed on the JSE Limited South Africa in 1986.
In July 2002 the Investec Group implemented a dual listed companies
structure, which synthetically merged Investec, listed on the
Official List and traded on the London Stock Exchange, with Investec
Limited, which is listed on the Johannesburg Stock Exchange.
Investec also has a secondary listing on the Johannesburg Stock
Exchange. Investec is a constituent of the FTSE 100 index and
together with Investec Limited has a pro forma market capitalisation
of approximately GBP3.8 billion.
The Investec Group has expanded through a combination of substantial
organic growth and a series of strategic acquisitions. It now has an
efficient integrated international business platform offering all of
its core activities in the United Kingdom and South Africa, with
select activities in Australia.
The Investec Group is organised as a network comprising six business
divisions: Asset Management, Wealth & Investment, Property
Activities, Private Banking, Investment Banking and Capital Markets.
Its head office provides certain group-wide integrating functions
and is also responsible for its central funding and the Trade
Finance business.
For the year ended 31 March 2011 the Investec Group reported
operating profit (net profit before tax, goodwill, acquired
intangibles and non-operating items but after earnings attributable
to non-controlling interests) of GBP434.4 million, assets of GBP50.9
billion, total capital resources of GBP5.2 billion and total third
party assets under management of GBP88.9 billion.
8 Information on Evolution
Evolution is the holding company of Evolution Securities, Williams
de Broe and Darwin Strategic Limited. Founded in April 2001,
Evolution is listed on the Official List and traded on the London
Stock Exchange.
Williams de Broe is one of the UK`s leading and fastest growing
private client investment managers, with a heritage dating back to
1869 and offices in Bath, Birmingham, Bournemouth, Edinburgh,
Exeter, Guildford and London.
The business employs over 150 investment professionals in seven UK
locations, including over 70 Investment Managers providing a
comprehensive range of investment services to all of its clients and
their professional advisers.
Evolution has expanded its private client business over the last
five years both through organic growth and with the successful
integration in 2009 of the new teams in Edinburgh and the Singer &
Friedlander Investment Management Limited acquisition in London,
repositioning the business in its sector.
Williams de Broe`s performance and research capability have most
recently been recognised by:
* The Daily Telegraph Wealth Management awards, winning Research
Analyst of the Year 2010, and
* The Financial Times Wealth Management Review 2011 where two of
its portfolio strategies were ranked first and second for
performance over the past 3 years
As at 30 June 2011, Williams de Broe had assets under management of
approximately GBP6.0 billion. Subsequent to that date, Evolution
announced that Williams de Broe had reached agreement to acquire BNP
Paribas Private Investment Management Limited. As at 30 June 2011
BNP Paribas Private Investment Management Limited had assets under
management of approximately GBP1.8 billion.
Evolution Securities is a leading investment bank focused on serving
an international institutional corporate client base, specialising
in the UK and European equity and debt markets. Services include
equity and fixed income research, institutional sales and trading,
equity market making, debt capital markets and equity corporate
finance and corporate broking.
Evolution Securities` corporate broking and advisory team has 80
corporate clients. The business has executed 30 equity issues since
January 2010 raising over GBP2.6 billion and has significant
strength and track record in the natural resources sectors.
Evolution Securities publishes research on more than 250 UK and Pan-
European listed companies, and makes markets in over 400 stocks.
Evolution Securities was ranked first in both FTSE 100 and FTSE 250
stock recommendation categories by StarMine Analyst Awards.
Evolution Securities was voted Top European Fixed Income Agency
Broker of 2011 by Credit Magazine for the 3rd consecutive year. In
2010 the fixed income business traded over EUR16 billion worth of
bonds in more than 2,100 different securities.
Evolution Securities has also been a market leader in the debt
capital markets business during 2011, resulting in the successful
issuances of retail bonds for Tesco, Provident Financial and Places
for People raising in excess of GBP300 million.
For the 6 months ended 30 June 2011, the Evolution Group reported an
after tax profit of GBP2.8 million and gross assets of GBP372.1
million. For the 12 month period ended 31 December 2010, the
Evolution Group reported a loss after tax of GBP2.0 million.
9 Management, employees and locations
There is a strong geographic fit between Investec`s and Williams de
Broe`s wealth and investment businesses, with Williams de Broe`s UK
footprint adding to Investec`s existing UK network through its
offices in Birmingham and the South-West of England. While Investec
may over time seek to consolidate operations in cities where the
enlarged group has two offices, there are no current plans to change
the locations of Investec or Evolution`s places of business.
Investec has great respect for the business that has been built up
within Williams de Broe, in particular the client relationships of
their investment managers. Investec is committed to retaining these
managers and supporting them in growing the relationships with their
clients. Investec`s existing wealth and investment operation has
proven and scalable settlement and support capability. Accordingly,
Investec intends, through its strategic and integration committees,
to achieve operational synergies, including some headcount
reductions in support functions, but does not expect this to impact
the client service and operational effectiveness of the business.
Investec`s existing strategy is to be the leading mid-market
investment bank in the UK. Through the acquisition of Evolution
Securities, Investec expects to augment Investec`s existing well-
ranked UK investment banking capabilities and strong corporate and
institutional client franchise. Evolution`s fixed income and debt
capital markets offering is a good complement to Investec`s existing
business in that area. Investec intends to reduce aggregate
investment banking headcount to avoid unnecessary overlap with its
existing activities whilst maintaining an appropriately sized
employee base.
The existing chief executive of Evolution, Alex Snow, will become
the executive chairman of Investec`s UK investment banking division
and will join the boards of Investec Bank plc and Investec Wealth &
Investment Limited. David Currie will continue as head of Investec`s
UK investment banking division. Philip Howell will remain the chief
executive of Williams de Broe and will join the board of Investec
Wealth & Investment Limited and become a member of the strategic and
integration committees of the greater wealth and investment group.
Jonathan Wragg, the chief executive of Investec Wealth & Investment
Limited and an existing member of the strategic and integration
committees will join the board of Williams de Broe.
Following completion of the Offer, the existing employment rights,
including pension rights, of the management and employees of
Evolution will be fully safeguarded.
10 Evolution Share Schemes
At the same time as, or as soon as practicable following,
publication of the Scheme Document, Evolution will write to
participants in the Evolution Share Schemes to inform them of the
effect of the Offer on their rights under the Evolution Share
Schemes and to set out appropriate proposals.
11 Implementation Agreement
Evolution and Investec have entered into the lmplementation
Agreement which contains certain obligations in relation to the
implementation of the Scheme and the conduct of Evolution`s
operations prior to the Effective Date or termination of such
agreement. In particular, the lmplementation Agreement contains the
following principal provisions:
Non-Solicitation arrangements
Evolution has undertaken, amongst other things (subject to the
overriding fiduciary duties of the Evolution Directors), not to, and
to procure that members of its Group do not, make any initial or
further approach to, entertain any approach from, or enter into or
continue negotiations with, any other person with a view to a Third
Party Transaction taking place.
Evolution has also undertaken to notify Investec immediately in
writing of any approach that is made to it or any member of
Evolution`s Group regarding any Third Party Transaction.
Break fee arrangements
Evolution has agreed to pay Investec a break fee of GBP2.3 million
if:
a) the Scheme Document is not posted by Evolution within 28 days
of the date of this announcement or, if permitted by the Panel,
such later date as Evolution and Investec may agree;
b) the Evolution Directors withdraw or adversely modify or qualify
their recommendation (or intention to recommend) to Evolution
Shareholders to vote in favour of the Scheme and/or the General
Meeting Resolutions (or if applicable to accept the Offer) or
they at any time decide not to proceed with the Scheme; or
c) a Third Party Transaction is announced prior to the Offer
lapsing or being withdrawn and the Third Party Transaction
referred to in such announcement or any other Third Party
Transaction is either: (i) recommended by the Evolution
Directors; or (ii) becomes or is declared unconditional in all
respects or is completed.
Termination provisions
The lmplementation Agreement may, subject to compliance with the
City Code and the requirements of the Panel, terminate in certain
circumstances, including:
a) if a Condition becomes incapable of satisfaction or is invoked
so as to cause the Offer not to proceed in circumstances where
such invocation is in accordance with the Code;
b) if Evolution Shareholders do not vote to approve the Offer at
the Court Meeting or the General Meeting Resolutions are not
approved at the General Meeting;
c) if the Court Orders are not granted or (save as the parties may
agreed in writing) the Effective Date has not occurred on or
before 31 March 2012;
d) by notice in writing from Investec to Evolution if the
Evolution Directors have withdrawn or adversely modified or
qualified their recommendation to Evolution Shareholders to
vote in favour of the Scheme and the General Meeting
Resolutions and either (i) the Panel consents to Investec
withdrawing its offer (while structured as a Scheme) or (ii) a
Third Party Transaction becomes or is declared wholly
unconditional or is completed; or
e) if Investec elects to implement the Offer by way of a Takeover
Offer, and if the Takeover Offer once announced under Rule 2.5
of the Code lapses in accordance with its terms (with the
consent of the Panel) or is withdrawn.
Further information regarding the lmplementation Agreement will be
set out in the Scheme Document.
12 Structure of the Scheme
It is intended that the acquisition of the Evolution Shares will be
effected by way of a Court sanctioned scheme of arrangement under
Part 26 of the Companies Act. The Scheme is an arrangement between
Evolution and the Evolution Shareholders and is subject to the
approval of the Court.
The purpose of the Scheme is to provide for Investec to become the
holder of the entire issued ordinary share capital of Evolution.
This is to be achieved by the cancellation of the Scheme Shares held
by Evolution Shareholders and the application of the reserve arising
from such cancellation in paying up in full such number of new
Evolution Shares, which is equal to the number of Scheme Shares
cancelled, and issuing the same to Investec in consideration for
which Evolution Shareholders on the register of members at the
Scheme Record Time will receive new Investec Shares on the basis set
out in paragraph 2 of this announcement.
To become effective, the Scheme requires, amongst other things, the
approval by a majority in number of Scheme Shareholders representing
at least 75 per cent. in value of the Scheme Shares held by such
Scheme Shareholders voting, either in person or by proxy, at the
Court Meeting, together with the sanction of the Court and the
passing by the Scheme Shareholders of a special resolution necessary
to implement the Scheme at the General Meeting. In addition, both
the Scheme and the Capital Reduction must be approved by the Court.
The Scheme is also subject to certain conditions and certain further
terms referred to in Appendix I of this announcement and to be set
out in the Scheme Document.
Once the necessary approvals from Evolution Shareholders have been
obtained and the other Conditions have been satisfied or (where
applicable) waived, the Scheme will become effective upon the
confirmation of the Capital Reduction by the Court and delivery of
the Reduction Court Order to the Registrar of Companies. Subject to
receipt of the requisite regulatory approvals, the Scheme is
expected to become effective by the end of 2011.
Upon the Scheme becoming effective, it will be binding on all Scheme
Shareholders, irrespective of whether or not they attend or vote at
the Court Meeting or the General Meeting.
Evolution Shares will be acquired pursuant to the Scheme fully paid
and free from all licences, charges, equities, encumbrances, rights
of pre-emption and any other interests of any nature whatsoever and
together with all rights attaching thereto, including voting rights
and the rights to receive and retain in full all dividends and other
distributions declared, made or paid on or after the Effective Date.
Investec reserves the right to elect to implement the acquisition of
the Evolution Shares not already owned by it by way of a Takeover
Offer as an alternative to the Scheme. Any such Takeover Offer will
be subject to an acceptance condition of Investec having acquired
(whether pursuant to the Offer or otherwise) such percentage (being
more than fifty per cent.) of the Evolution Shares, as Investec may
decide, having consulted with Evolution and the Panel and will
otherwise be implemented on the same terms (subject to appropriate
amendments), so far as applicable, as those which would apply to the
Scheme and in compliance with applicable laws and regulations.
The Investec Shares issued to Evolution Shareholders pursuant to the
Scheme will rank pari passu in all respects with the Investec
Shares. Further details of the Scheme, including an indicative
timetable for its implementation, together with how Scheme
Shareholders may participate in the Court Meeting and General
Meeting, will be contained in the Scheme Document.
13 Opening Position Disclosures and Interests
Investec confirms that it has made an Opening Position Disclosure,
setting out the details required to be disclosed by it under Rule
8.1(a) of the Code.
14 Overseas Shareholders
The availability of the Offer to persons not resident in the United
Kingdom may be prohibited or affected by the laws of the relevant
jurisdictions. Such persons should inform themselves about, and
observe any applicable requirements. Further details in relation to
overseas shareholders will be contained in the Scheme Document.
15 Delisting and re-registration
Upon or shortly after the Scheme becoming effective, the London
Stock Exchange will be requested to cancel trading in Evolution
Shares on the London Stock Exchange`s market for listed securities
and the UK Listing Authority will be requested to cancel the listing
of the Evolution Shares from the Official List.
On the Effective Date, share certificates in respect of the
Evolution Shares will cease to be valid and should be destroyed. In
addition, entitlements to Evolution Shares held within the CREST
system will be cancelled on the Effective Date.
It is also proposed that following the Effective Date, Evolution
will be re-registered as a private limited company.
