Storebrand ASA acquires SKAGEN AS

Storebrand acquires SKAGEN and strengthens its position in a growing savings market

- Storebrand is Norway's largest private asset manager and leading supplier of occupational pensions. SKAGEN has a strong position in the Norwegian savings market, with a clear investment philosophy and a strong brand. Together we want to provide our clients with even better savings options. We believe this is an offensive step towards increased growth in savings and pensions, which will increasingly become one market in the future,” says CEO of Storebrand Odd Arild Grefstad.

A leading position in the Norwegian funds- and savings market

Savings and pensions form Storebrand's core business. The acquisition increases the Storebrand Group's share of the of NOK 221bn private fund savings market from 4% to 17%. SKAGEN has approximately 140,000 unit holders.

“We already have a good position in the overall savings and pension market, and this will make us the second largest player in a market with strong growth,” says Grefstad.

SKAGEN also has a considerable portfolio of institutional clients and distributors in Sweden and internationally.

“Together we can be even stronger in the institutional market, also at an international level,” says CEO of Storebrand Asset Management Jan Erik Saugestad.

“SKAGEN is a contrarian and independent asset manager, held in high esteem by their clients. We believe in their active investment philosophy, and will protect this along with their strong brand. We have good experience with active fund management through the Storebrand-group,” says Jan Erik Saugestad.

The asset management industry is seeing an increasing demand for greater investments and efficiency and while fund management will continue to be held separately in SKAGEN, we will find solutions to secure client-oriented and cost effective platforms going forward.

“I am very excited about this transaction, which represents a new chapter in SKAGEN’s history. I am looking forward to working with Storebrand to create good returns and increased value for our customers,” says CEO of Skagen Øyvind Schanke.

Details about the transaction

In accordance with the share purchase agreement entered into, Storebrand will acquire all of the A-shares, and 10 000 of the B-shares in SKAGEN, equivalent to 90.95% of the share capital in the company and 99.9% of the voting rights in the company.

Storebrand will pay the selling shareholders a sum of NOK 1.6bn for the shares at the time of transaction, 75% will be new issued shares in Storebrand ASA and 25% will be in cash. In addition, there is a possibility of an additional earnout based on positive development in SKAGEN's results and income, and a share of the performance fees as a result of excess return relative to SKAGEN funds’ relevant benchmarks (performance remuneration). For a more detailed description, see note 15 in Storebrand ASA's 3Q report.

SKAGEN AS will be acquired by Storebrand ASA. The share percentage 75% of the purchase price at closing is issued through Storebrand ASA issuing 17 904 091 new shares based on an authorization given by the Board of Directors at the Annual General Meeting on 5 April 2017. The cash payment will be financed by the sale of short-term bonds in Storebrand ASA's liquidity portfolio, which will amount to NOK 1.5bn after the transaction. In addition to the liquidity portfolio, Storebrand ASA has an unused credit facility of EUR 240m.

The transaction is expected to have an immediate 2 percentage point negative impact on Storebrand's solvency margin. It is expected that the transaction will strengthen the Group's solvency margin and dividend capacity going forward.

The conclusion of the transaction is dependent upon approval by the Norwegian Financial Supervisory Authority and the Ministry of Finance, as well as the Norwegian Competition Authorities in Norway and Sweden, and is expected to conclude in 2017.

Selected financial figures for SKAGEN AS and expected synergies

The table below states key figures for SKAGEN's business from 2014-2016

NOK m. 2016 2015 2014
Gross management fee 1,000.1 1,217.8 n.a.
Distribution costs (229.4)  (289.0)   n.a. 
Net   income 770.7 928.8 934.7
Wage costs (380.5) (466.9) (476.3)
Depreciation (17.6)  (17.9)  (18.8) 
Other operating costs (183.0)  (234.3)  (249.6) 
Operating   profit 189.6 209.7 190.0
Net financial items 6.8 9.3 11.8
Profit   before tax 196.4 219.0 201.8
Tax costs (48.6) (64.3) (52.3)
Profit   av tax  147.8  154.7  149.5 
Core capital 391.9 329.0 267.5
Capital requirements 100.3 109.2 89.4
Capital adequacy 390.6% 301.4% 299.1%
Total assets 1,048.7 1,110.5 1,246.0
Total debt 637.2 758.8 962.2
Equity 411.5 351.7 283.9

SKAGEN reported in 2016 a net result of NOK 148m. At the end of 2016 and as of October 2017, SKAGEN had NOK 83.3bn and NOK 80bn in assets under management respectively.

It is expected that the transaction to combine SKAGEN and Storebrand will give initial synergies of more than NOK 50m.

More about SKAGEN's business

SKAGEN AS is licensed by the Financial Supervisory Authority as an asset management company, and manages 17 mutual funds. The Board of Directors in SKAGEN consists of Henrik Lisæth (chairman), Anne Sophie Kleppa Stensrud, Per Gustav Blom, Nils Martin Petersson, Leiv Askvig og Frances Eaton. Øyvind Gjærevoll Schanke is CEO. The total number of employees is 130.

Advisors

ABG Sundal Collier is the financial and transaction adviser for Storebrand, Thommessen is the legal adviser and Ernst and Young the accounting adviser.

International analyst conference call and presentation

Storebrand invites to presentation of results and presentation of this transaction on Wednesday 25 October at 10 am.

The investor and analyst presentation will be held in English. The presentation will be live and available on demand at storebrand.com/ir. Questions can be sent to ir@storebrand.no and will be addressed during Q&A.

The international analyst conference call for investors and analysts will be held at 14.00 CET. To attend the conference call we kindly ask you to dial in 10 minutes before start at: +47 22 56 33 18 from Norway, or + 44 (0) 20 3003 2666 from abroad. Password: Storebrand. See Storebrand.com/ir for more information.

Lysaker, 25 October 2017

Contact persons/media inquiries:

CFO, Lars Aa. Løddesøl: (+47) 934 80 151

Head of Investor Relations, Kjetil Ramberg Krøkje:

kjetil.r.krokje@storebrand.no or (+47) 934 12 155

Acting Communications Director, Jan Otto Risebrobakken:

Jan.otto.risebrobakken@storebrand.no or (+47) 480 82 602

Storebrand's ambition is to be the best provider of saving for pensions. Storebrand will deliver sustainable solutions adapted to the customer's individual situation, so that each person receives a better pension in a more sustainable world. Storebrand has about 40.000 corporate customers and 1.9

million individual customers, and is headquartered in Lysaker outside of Oslo, Norway. Storebrand manages more than NOK 626bn and is Norway's largest asset manager. We work hard to reach our vision: Recommended by our customers. Storebrand (STB) is listed on Oslo Stock Exchange.

Visit us at www.storebrand.no and follow us on twitter: @Storebrand_no

This announcement is subject to information pursuant to the Securities Trading Act § 5-12

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