Caledonia Investments PLC
09 March 2006
Caledonia Investments plc
Investment in Liberty Ermitage, the Jersey fund of hedge funds manager
Caledonia is pleased to announce its investment in a joint venture to acquire
Liberty Ermitage Jersey Limited ('Ermitage') from Liberty Group Limited of South
Africa. The acquisition will be made through a new vehicle to be owned 60% by
Caledonia and 40% by Ermitage's management and Paul Myners, who will be
Ermitage is one of the oldest and largest offshore fund of hedge funds
management groups in Europe. As at 31 December 2005, it managed approximately
£1.4 billion (US$2.4 billion), of which £1.0 billion (70%) was in fund of hedge
funds and £0.4 billion (30%) was in money market funds. Revenues for 2005 were
£14.4 million, of which performance fees were £2.7 million (19%). These figures
exclude the results of parts of Ermitage's business that are not included in the
The acquisition price, which is payable in cash, comprises an initial
consideration of £35.1 million and up to a further £6.0 million payable over the
next three years, dependent upon the level of assets managed in that period by
Ermitage. The maximum acquisition price of £41.1 million represents
approximately 3.0% of assets under management at the end of 2005. Caledonia
expects to invest £21.9 million at completion and has underwritten the
obligations of Ermitage's new holding company pending the finalisation of
external debt negotiations.
Paul Myners, a highly regarded figure in the investment management world, has a
long association with Caledonia dating back to 1985 when he joined Gartmore, the
fund management company originally founded by British & Commonwealth Holdings,
in which Caledonia was a significant shareholder. Mr Myners will become chairman
of Ermitage and will invest in the company alongside Caledonia and the
management team, led by Ian Cadby, which has worked together since 2001.
Tim Ingram and Jamie Cayzer-Colvin, directors of Caledonia, will also be joining
the board of Ermitage.
The acquisition is subject, inter alia, to regulatory consents.
Commenting on the investment, Tim Ingram, chief executive of Caledonia, said:
'We are delighted to be backing Ian Cadby and his team in acquiring Ermitage.
The business is very well positioned to take advantage of the expected growth of
the hedge fund industry in Europe, particularly as it becomes accepted by more
and more institutional investors and consultants.'
Paul Myners, chairman-designate of Ermitage, commented:
'Hedge funds and absolute return investments are moving to the mainstream of
institutional and private investor portfolios. Investment in this area requires
specialist skills. Under Ian Cadby and his team, Ermitage has developed a
strong and professional reputation.'
Ian Cadby, chief executive of Ermitage, said:
'Ermitage is now very well positioned to be one of the key players in the
European hedge fund of funds industry.
I am delighted we have been able to acquire the business with a partner of the
calibre of Caledonia, whose expertise within the investment management and hedge
fund industry will add significantly to our growth plans going forward.
We are also very excited that Paul Myners will be investing alongside us and has
agreed to be our chairman'.
9 March 2006
Caledonia Investments plc Tel: 020 7802 8080
Ermitage Tel: 01534 615500
College Hill Tel: 020 7457 2020
Further information on Ermitage and Caledonia can be found at:
NOTE TO EDITORS ON CALEDONIA
Caledonia is a long established investment company with international scope
listed on the London Stock Exchange. Since April 2003 Caledonia has been
classified in the Global Growth sector of investment trusts where its investment
performance puts it in the top quartile over 3, 5 and 10 years. Moreover,
Caledonia's strategy has delivered outperformance against its benchmark FTSE
All-Share Total Return index of 133.9% over the five year period to 28 February
2006 and 175.9% over the ten year period to 28 February 2006. Caledonia has a
policy of delivering progressive annual dividends with a 38-year record of
unbroken annual dividend increases. Through holding a diversified portfolio,
Caledonia aims to maintain a medium overall risk position.
At 28 February 2006, Caledonia had an unaudited Net Asset Value of 1992p per
Caledonia's strategy is to focus on a portfolio of around 30 to 40 principal
investments, where it has significant and influential stakes 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 26% of net assets,
including holdings in Close Brothers, Rathbone Brothers and Polar Capital;
Leisure and Media: comprising 15% of the net assets, including holdings in
Kerzner International and The Sloane Club; Managed General Funds: comprising 24%
of the net assets including holdings in British Empire Securities and a fund
managed by Aberforth Partners; Industrial and Services: comprising 12% of the
net assets, including investments in Offshore Logistics and Melrose Resources;
Property: comprising 11% of the net assets, including a holding in Quintain
Estates; Net Current Assets 10%; and Other: comprising 2% of the net assets.
The percentages of the net assets quoted are as at 28 February 2006.
This information is provided by RNS
The company news service from the London Stock Exchange VEJLMPTMMJMMAF