REG - Polar Capital Hldgs - Crystallisation of Business Unit & Issue of Shares

Polar Capital HoldingsAnnouncement

12/11/2024 09:15

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RNS Number : 8899L  Polar Capital Holdings PLC  12 November 2024

Polar Capital Holdings plc

12 November 2024

Crystallisation of Business Units and Issue of Shares

 

Polar Capital Holdings plc ("Polar Capital" or the "Company") announces the
crystallisation of Preference Shares held by David Keetley, the lead manager
of the Global Convertible Bond Fund.

 

These crystallisations are expected to be immediately earnings enhancing for
shareholders. Based on the results for the financial year ended 31 March 2024,
the combined impact of the crystallisation would have been an earnings
enhancement of around 0.1p per share(1).

 

Background

As set out at the time of the Company's admission to AIM, Polar Capital has
structured its fund management operations in such a way that the fund
management teams are placed in separate business units.  Each business unit
is a separate profit centre and the fund managers responsible receive each
year a payment which comprises a share of their unit's core operating profit
(operating profit before performance fees and related distributions) and
performance fees.

 

In addition to the remuneration structure described above, certain fund
managers and their teams are offered the prospect of an interest in the
capital of the Company through the purchase of an individual class of
preference shares in Polar Capital Partners Limited, a wholly owned subsidiary
of the Company.  These preference shares have been structured in such a way
as to become convertible upon the occurrence of certain events, known as
crystallisation events, into cash or, at the option of the Company, ordinary
shares at a ratio that is intended to be earnings enhancing for the Group.
At the election of the holders of the preference shares, they may crystallise
all or part of their preference shares, or retain the balance, if any, for a
further crystallising event at a subsequent date.

 

From the effective date of crystallisation, the fund managers concerned cease
to be eligible to receive their share (or the relevant proportion in the case
of a partial crystallisation) of the business unit's core operating profit
which has been crystallised and simultaneously going forward will receive a
reduced interest in their performance fees.

 

 

Global Convertible Bond Fund unit

Mr David Keetley has elected to crystallise the remaining one-third of his
preference shares in relation to this Fund.

 

Under the terms of the preference shares the crystallisation value is
calculated as at 31 March 2024 and either satisfied in cash, or at the option
of the Company, by issue of new ordinary shares. The Company has elected to
satisfy the consideration for both crystallisations by the issue of new
ordinary shares.

 

The crystallisations are in relation to the crystallisation period ended 31
March 2024. The initial crystallisation value in respect of the partial
crystallisation of the Global Convertible Fund unit is to be satisfied by the
issue of up to 114,716 new ordinary shares. The new ordinary shares will be
issued in tranches as described below.

 

The crystallisation value is re-calculated at each of the first, second, and
third anniversaries of 31 March 2024, based on the profits of the business
unit in the 12 months ended on the respective anniversary. If the result of
the re-calculation provides for a smaller cash or share consideration, then
the amounts paid or shares issued to the owners of the preference shares are
adjusted accordingly. The effect of such re-calculation is to adjust downwards
any consideration and there can never be an increase in the crystallisation
value. In return for this delivery of new ordinary shares, the Convertible
bond team will be forfeiting their interests (or the relevant proportion in
the case of a partial crystallisation) in their core operating profit in
relation to the Polar Global Convertible Bond Fund for the financial year
ended 31 March 2024.

 

Under the terms of the preference shares 10 percent of the new ordinary shares
are issued immediately with the balance of 30 percent of the new ordinary
shares due (subject to the re-calculation described above) on or as soon as
practicable after each crystallisation anniversary.

 

As a result, the Company will issue a total of 11,471 (the initial 10%) new
ordinary shares in respect of this crystallisation.  The new ordinary shares
will rank pari passu with the Company's existing ordinary shares at the time
of issue.

 

The Company's current issued share capital is 101,548,934 ordinary shares and
following admission of the new ordinary shares the total ordinary shares in
issue will be 101,560,405.

 

(Note 1) Presented for illustrative purposes based on the year end results for
31 March 2024 and assuming the crystallisation occurred as at 31 March 2024.

 

For further information please contact:

Polar
Capital                                                                      +44
(0)20 7227 2700

Gavin Rochussen (Chief Executive)

Samir Ayub           (Chief Financial Officer)

 

Numis Securities Limited - Nomad and Joint Broker     +44 (0)20 7260 1000

Giles Rolls (QE)

Charles Farquhar

 

Peel Hunt LLP - Joint
Broker
+44 (0)20 3597 8680

Andrew Buchanan

Oliver Jackson

 

Camarco
+44 (0)20 7357 4980

Ed Gascoigne-Pees

Jennifer Renwick

Phoebe Pugh

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