Sanne is to acquire the European fund administration business of PraxisIFM Group for £54m – a deal that equates to 20% of PraxisIFM’s overall business revenue.
The acquisition is expected to complete during Q4 2021, subject to regulatory approvals.
Sanne said the acquisition of the business – which has delivered double-digit revenue growth in recent years – boosts its presence in the European listed funds administration sector, especially for the UK market, while adding to its footprint in Guernsey, a key domicile for European private equity funds.
The deal adds more than 80 staff and £25bn of assets under administration to Sanne, with offices in Guernsey, Jersey, London, Luxembourg and Malta.
The total cash consideration of £54m is payable on completion and will be funded from Sanne's existing resources. The PraxisIFM business is expected to deliver revenues of £13m for the year ending 30 April 2022.
Once integrated, with the removal of current PraxisIFM group recharges, Sanne anticipates the business to deliver profit margins in line with its own.
For the year ended 30 April 2020, the PraxisIFM funds business had profits before tax, after group recharges, of £1.1m and gross assets of £4.5m.
Appleby in Jersey, Guernsey and the Cayman Islands acted for PraxisIFM Group in the sale. The Jersey team was led by Partner Andrew Weaver, the Guernsey team by Group Partner Richard Sheldon.
View from PraxisIFM
PraxisIFM said the deal will allow it to focus the business on developing its core divisions of private wealth and corporate services, as well as its pension administration offering.
Proceeds will be deployed to reduce the group’s bank borrowings, return the company to a progressive dividend policy, provide the opportunity for share buy-backs and continue investment in technology.
PraxisIFM CEO Robert Fearis (pictured) commented: “We see this agreement with Sanne as an opportunity to energise the group by equipping it for the future and making PraxisIFM truly competitive in a rapidly developing market.”
Sanne trading update
In addition, Sanne has reported a resilient performance in the half-year to 30 June 2021 and continued to see stronger growth returning to its core markets despite the ongoing pandemic conditions.
The improved performance included a significant increase in new business activity, with H1 2021 annualised total new business wins up 38% on H2 2020 to £15.7m.
The first half has also seen an improvement in half-on-half constant currency organic growth from a flat performance in H2 2020.
On a constant currency basis, the group expects to report underlying operating profit margins broadly flat on H1 2020, but anticipates H2 improvement as the growth in new business wins is reflected in the results.
Both the PEA and STRAIT acquisitions, completed in the first half, have performed well in the period.
Potential offer from Cinven
Sanne remains in discussions with Cinven regarding a possible offer for the entire issued and to be issued share capital of Sanne.
The date by which Cinven is required either to announce a firm intention to make an offer for Sanne or to announce that it does not intend to make an offer is 5pm on 6 August.
The deadline can be extended by the board of Sanne, with the consent of the Takeover Panel.