Acquisition of AMCO fund management business - $100m funds under management
01 December 2008
Commoditrade Inc. (AIM: CMM), the commodities investment group,
today announces the acquisition from Keiron Mathias and Chris Adams
(“Sellers”) of the entire issued share capital of AMCO Management
Services Limited (“AMSL”), the controlling partner of AMCO
Commodities LLP (“AMCO”), a commodities fund manager, for a total
cash consideration of £4 million, to be satisfied as to £2 million
on completion and the balance payable in 4 equal instalments of
£500,000 in the course of the following 15 months. Each instalment
will, however, only be paid if the assets under management of AMCO
at the relevant payment date are no less than US$150 million.
Commoditrade currently enjoys the benefit of a profit share arrangement with AMCO, pursuant to which it is entitled to 75 per cent. of the annual net profits of AMCO. The acquisition of AMSL represents the final step in securing access to the entire business of AMCO and, as a consequence, this profit share arrangement will terminate on completion.
AMCO commenced trading in May 2006 and it now has in excess of US$100 million of assets under management dedicated to an investment strategy in the base metals market. AMCO achieved audited revenues of £1.6 million and operating profit (before payments to Commoditrade pursuant to the revenue share) of £966,000 in the financial year ended 30 November 2007. Net assets at that date were £785,000. Completion of the transaction is subject to approval from the FSA. Since its launch the AMCO Fund has achieved a cumulative return of over 25 per cent.
Chris Adams, one of the Sellers, is a Director of Commoditrade. Accordingly, the acquisition is deemed to be a related party transaction under the AIM Rules. The Independent Directors of Commoditrade (being those Directors other than Mr Adams), having consulted with Strand Partners Limited, the Company’s nominated adviser, consider the terms of the acquisition to be fair and reasonable so far as its shareholders are concerned. Strand Partners Limited has taken into account the Independent Directors’ commercial assessments of the acquisition.
Commenting, David Phipps, Chief Executive Officer, Commoditrade Inc. said
"We have had a very good working relationship with the AMCO team for two years and the acquisition of AMCO makes for an excellent fit with our previously announced strategy to diversify our product range and commodity coverage to broaden our revenue streams.
“The AMCO Fund has delivered excellent performance since it was launched in 2006 and we are very pleased that the AMCO team have agreed to join Commoditrade which will help maintain the continuity and future development of the business. At the same time this acquisition solidifies and enhances Commoditrade’s bespoke offering to investors in the base metals market place and delivers another stream of earnings into the group."
Commoditrade currently enjoys the benefit of a profit share arrangement with AMCO, pursuant to which it is entitled to 75 per cent. of the annual net profits of AMCO. The acquisition of AMSL represents the final step in securing access to the entire business of AMCO and, as a consequence, this profit share arrangement will terminate on completion.
AMCO commenced trading in May 2006 and it now has in excess of US$100 million of assets under management dedicated to an investment strategy in the base metals market. AMCO achieved audited revenues of £1.6 million and operating profit (before payments to Commoditrade pursuant to the revenue share) of £966,000 in the financial year ended 30 November 2007. Net assets at that date were £785,000. Completion of the transaction is subject to approval from the FSA. Since its launch the AMCO Fund has achieved a cumulative return of over 25 per cent.
Chris Adams, one of the Sellers, is a Director of Commoditrade. Accordingly, the acquisition is deemed to be a related party transaction under the AIM Rules. The Independent Directors of Commoditrade (being those Directors other than Mr Adams), having consulted with Strand Partners Limited, the Company’s nominated adviser, consider the terms of the acquisition to be fair and reasonable so far as its shareholders are concerned. Strand Partners Limited has taken into account the Independent Directors’ commercial assessments of the acquisition.
Commenting, David Phipps, Chief Executive Officer, Commoditrade Inc. said
"We have had a very good working relationship with the AMCO team for two years and the acquisition of AMCO makes for an excellent fit with our previously announced strategy to diversify our product range and commodity coverage to broaden our revenue streams.
“The AMCO Fund has delivered excellent performance since it was launched in 2006 and we are very pleased that the AMCO team have agreed to join Commoditrade which will help maintain the continuity and future development of the business. At the same time this acquisition solidifies and enhances Commoditrade’s bespoke offering to investors in the base metals market place and delivers another stream of earnings into the group."
