Caledonia Investments PLC
27 February 2003
CALEDONIA INVESTMENTS PLC ('CALEDONIA') BUYS STAKE IN NOVA CAPITAL GROUP LIMITED
Caledonia is pleased to announce the acquisition of a 33% stake in Nova Capital
Group Limited ('Nova').
Nova is a specialist management company focused on under-performing or
under-managed portfolios in the private equity or venture capital world. The
emphasis is on improving the operational and financial performance of individual
portfolio assets and ensuring that the most appropriate management resource is
in place. This is achieved by a strategic and hands on approach from the Nova
team and the deployment of relevant senior interim executives.
Nova was set up in June 2002 by Michael Kelly (former senior partner of
Executive Interim Management) and David Williamson (former CEO of Granville
Baird Limited) together with Lord Hodgson (former Chairman of Granville Baird
Limited), who is the Chairman of Nova.
Nova has already taken on its first portfolio through the acquisition of LICA
Development Capital, a £70 million portfolio of early and mid-stage investments
in 20 UK companies. The portfolio includes the publishing company Duckworth and
Planet Ice, Europe's leading ice-rink operator.
Caledonia is pleased to be able to support such an experienced management team
in a market area with exciting opportunities over the coming years for this type
Tim Ingram, Chief Executive of Caledonia, commented:
'Caledonia is delighted to be investing in Nova, a company which is a pioneer in
its sector. In this environment of difficult economic and market conditions,
private equity and venture capital firms are finding it difficult to realise
value in their portfolios. We firmly believe that there will be significant
opportunities for Nova to grow in these markets.'
David Williamson, joint managing director of Nova, commented:
'We view the backing of Caledonia as an important endorsement of our proposition
from a blue chip investment house. The strategic relationship will provide us
with access to capital and contacts to help us grow faster. We are looking
forward to working together.'
Michael Kelly, joint managing director of Nova, added:
'Many private equity and venture capital portfolios need a step change in
performance to give the investors a reasonable return. In today's environment of
low growth and unattractive exit markets, this will only be achieved by driving
performance and value from the underlying assets. This has not been the
industry's strong suit to date. Nova's focus on managing assets with seasoned
operators as portfolio managers and the use of senior interim executives to
bring about critical change within the portfolio companies gives them the best
chance to optimise returns to investors.'
27 February 2003
Caledonia Investments Plc
Tim Ingram Tel: 020 7802 80 80
Tony Friend Tel: 020 7457 20 20
Celia de Rudder
Nova Capital Group Limited
Michael Kelly Tel: 020 7647 18 00
Nan Williams Tel: 020 7763 59 99
Note to editors:
Michael Kelly, aged 49, is Nova's joint managing director. He was previously
senior partner of the interim management specialists Executive Interim
Management AG ('EIM'). EIM was set up in 1988 by Egon Zehnder International, a
leading executive search firm. He was elected a Partner in 1991 and became UK
Managing Partner and member of the Executive Committee of the firm in 1992. In
1994, he led the negotiations to buy the majority of the equity from the
founders, which enabled a global partnership to be created; Michael was one of
three who ran the firm worldwide. During his time at EIM worldwide income grew
from CHF 2.0 million to CHF 60.0 million and the number of offices from 3 to 11.
Michael left EIM in July 2001 and whilst observing a six-month restrictive
covenant undertook the Interim Chief Executive role at PGA European Tour Courses
PLC which resulted in the successful disposal of the business to Murryhill Ltd.
David Williamson, aged 44, is Nova's joint managing director. He is a qualified
lawyer and was previously chief executive of private equity and investment
banking specialists Granville where he worked for almost 20 years; for the last
seven years, he was chief executive. Between 1983 and 1995, David was central to
building up Granville's corporate finance and private equity businesses and was
involved in over 25 private equity investments made by the firm. Following his
negotiation of the sale of the firm to Robert W. Baird, he remained for two
years as chief executive officer of Granville Baird. Granville was one of the
pioneers of the UK private equity market in the early 1980's and has managed
over £1 billion of funds.
Lord Hodgson, aged 60, is Nova's non-executive chairman. Lord Hodgson has over
30 years experience in the securities, investment banking and private equity
industries. He co-funded Granville in 1979 and spearheaded its growth as chief
executive (1979-1995) and latterly chairman (1995-2001). He remains a
consultant to the firm. He has also served on a number of industry
associations, including 10 years as a director of the Securities and Futures
Authority (SFA) where he was also chairman of the Finance and Audit Committee
and deputy chairman of the Enforcement Committee. He was created a life peer in
March 2000 having previously been Conservative MP for Walsall North from
1976-79. He holds a number of other non-executive directorships.
Notes to editors
Caledonia Investments plc
Caledonia is a long established investment company with international scope
listed on the London Stock Exchange. Caledonia's strategy has delivered
outperformance against its benchmark FTSE All-Share Total Return index of 26%
over the five year period to 31 December 2002 and 37% over the ten year period
to 31 December 2002. Caledonia has a policy of delivering a progressive annual
dividend growth with a 35-year record of unbroken annual dividend increases.
Through holding a diversified portfolio, Caledonia aims to maintain a medium
overall risk position.
At 31 December 2002, Caledonia had a Net Asset Value of 939 pence per ordinary
share (after deducting £20 million for contingent tax and other costs associated
with conversion to investment trust status, being the amount which such costs
are not expected to exceed). Based on a share price as at 31 December 2002 the
discount to its Net Asset Value per share (after deducting costs associated with
conversion referred to above) was 30.1 per cent.
Following Tim Ingram's appointment as chief executive in June 2002, a strategy
review was undertaken. The results of the strategy review were announced on 21
November 2002 together with the interim report for the half year to 30 September
Caledonia plans to focus on a portfolio of around 30 to 40 principal
investments, with a policy that at least 50% of the total portfolio should be in
quoted securities or other liquid assets. New investments will typically be in
the range £10 million to £25 million. Careful control is exercised over costs,
notwithstanding Caledonia's active and participative management style. The Board
believes that Caledonia has a long established and valuable reputation for being
a supportive long term investor, which brings a strong deal flow of
opportunities not always available to others.
Caledonia's investments are focused on a selected range of sectors where it has
good in-house knowledge that can add value to management of investee companies.
Where particular expertise is not held in-house, investments may be made through
third party managed funds where Caledonia will often seek a significant stake in
the management company.
Caledonia's selected sectors are: Financial comprising 33% of the portfolio,
including holdings in Close Brothers Group plc, ICAP plc and Rathbone Brothers
Plc; Leisure and Media comprising 17% of the portfolio, including holdings in
Kerzner International Ltd and The Sloane Club Group Ltd; Property and General
comprising 17% of the portfolio, including holdings in Quintain Estates and
Development PLC; Industrial and Services comprising 15% of the portfolio,
including investments in Offshore Logistics Inc. and Amber Industrial Holdings
PLC. Investment Funds comprising 15% of the portfolio includes holdings in
British Empire Securities and General Trust plc and funds managed by Aberforth
Partners. Technology comprises 3% of the portfolio. The percentages of the
portfolio quoted are as at 31 December 2002.
Conversion to investment trust status will eliminate Caledonia's future
liability for corporation tax on chargeable gains. As a result, Caledonia
believes it will be able to build greater value for shareholders and be more
appealing to retail shareholders which ultimately should contribute towards a
lower discount of Caledonia's share price to Net Asset Value per share. As an
investment trust, Caledonia expects to be included in the AITC Global Growth
sector where its investment performance would have put it in the top quartile by
reference to both five and ten year total shareholder returns for the period to
31 December 2002.
The Cayzer Trust Company Limited and other Cayzer family interests together
control some 49.9% of Caledonia.
This information is provided by RNS
The company news service from the London Stock Exchange