Alliance Trust has sold down a multi-million-pound stake in the firm that took on its investments business last year.
The sale of Liontrust Asset Management stock raised a higher-than-expected £21m, a 55% or £7.4m uplift on the book price of a year ago.
The Dundee headquartered fund manager agreed the sale of its Alliance Trust Investments to Liontrust in April as part of a restructuring of the business ordered by chairman Lord Smith.
Liontrust picked up the ATI portfolio – which consists of Aviva investments and other third-party funds with a collective value of circa £2.5 billion – in a complex deal worth up to £30m.
The trust accepted an up-front payment of up to £10m for the business, with the remaining purchase price being paid in shares and a further cash consideration of up to £3m to be paid dependent on performance at two years out from completion.
A first tranche of just over four million shares shares – then worth an estimated £13.6m – was transferred to the trust on conpletion of the deal last spring.
A second tranche of just over one million shares is due to be received by the trust in the spring.
Alliance Trust has now sold out its first tranche of shares – which represents 8.2% of London-based Liontrust’s issued share capital – to institutional investors for 520 pence per share.
The sale was conducted by broker Cannacord Genuity in agreement with Liontrust.
“The sale price of 520p per share of the placing shares represents a price close to the average mid-market price of Liontrust shares over the past 30 days and represents a significant return of 55.3% on the price of 334.9p at which the shares were issued,” Alliance Trust told the Stock Exchange.
“This return reflects the strong performance of Liontrust since buying ATI in April 2017.
“When ATI was sold, it was expected that the net proceeds of the sale would be not less than £25m, before any future contingent consideration.
“Alliance Trust now expects that the net proceeds will be not less than £35m, before any future contingent consideration.”
The sale of ATI came at the same time as the trust made the historic decision to outsource its core fund management operation to a number of global investment managers overseen by Willis Towers Watson.
Shareholders in the trust will have their first full chance to scrutinise how the new investment model is performing at the group’s AGM in the spring.
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