Elite Asset Management Plc acquires Alfred Berg Finland entities and becomes the exclusive distributor of BNP Paribas Asset Management's investment products in Finland

Elite Asset Management Plc, Company Announcement, 1 August 2017, 11:45 (EET)

Elite Asset Management Plc acquires Alfred Berg Finland entities and becomes the exclusive distributor of BNP Paribas Asset Management's investment products in Finland

• Elite Asset Management Plc ("Elite") acquires 100% of the shares of Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd. The major part of the acquisition is paid by issuing new A- and B-shares to the Seller, Alfred Berg Asset Management AB, making BNP Paribas Asset Management a 19% owner in Elite. 

• Elite and Alfred Berg Group, BNP Paribas Asset Management's subsidiary in the Nordic countries, have reached an agreement in Finland to develop jointly their activity and business locally.

• The transaction will enable Elite to offer its existing and new clients an even more comprehensive service offering. Furthermore, significant administrative and IT-related cost synergies are expected to be realised within 6 to 12 months.

• The transaction is estimated to increase the 2018 EBITDA of Elite with approximately 2.5-3.0 million euro resulting in an estimated total EBITDA of 5-6 million euro for 2018.

Through this transaction, Elite will become the exclusive distributor of BNP Paribas Asset Management's investment products in Finland. This partnership will enhance the investment solutions offered and broaden the clientele of Elite, especially with regards to institutional investors. In addition, the acquisition will add some 3 000 new clients to the Elite Group and client assets will reach approximately 3 billion euro, as of 30 June 2017.

"Elite is a well-known asset manager in Finland. Through this partnership, we bring access to an extensive range of global investment solutions to Elite's clients while Elite enhances our client access in Finland", says Vincent Trouillard-Perrot, CEO of Alfred Berg Group.

"It is our ambition that both Elite's and Alfred Berg's existing and future clients will be offered a comprehensive product range, a dedicated local service and superior client experiences. In addition, BNP Paribas Asset Management will be a supplementary professional shareholder who is willing to support Elite's long-term development, alongside our other shareholders", says Daniel Pasternack, CEO of Elite.

Elite Financial Outlook and Updated Estimates

The transaction is estimated to increase the 2018 EBITDA of Elite with approximately 2.5-3.0 million euro resulting in an estimated total EBITDA of 5-6 million euro for 2018. The non-recurring transaction and restructuring costs related to the acquisition are estimated to be approximately 2.5 million euro. In accordance with the applied accounting practice Elite plans to account 1.6 million euro as goodwill, while remaining 0.9 million euro will be expensed during second half of 2017. Elite has previously estimated that the full year EBITDA for 2017 is in the range of 2-2.5 million euro. As a result of the expensed non-recurring costs related to the transaction the full year 2017 EBITDA is revised downwards to 1.1-1.6 million euro. Elite estimates that the transaction will strengthen Elite's ability to grow profitably even beyond the estimated 2018 EBITDA of 5-6 million euro in the medium term. The transaction also increases the gross fee revenue of Elite by approximately 35% on an annual basis (figure based on 2016 gross fee revenue).

Details of the transaction and financing

Prior to the transaction Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd have provided investment funds and discretionary asset management service to clients in Finland. In 2016 the combined fee revenue of the Alfred Berg Finland entities was 3.9 million euro and the combined loss at EBITDA level was 1.1 million euro. Recently, the financial performance has developed positively and Alfred Berg Asset Management Finland Ltd and Alfred Berg Funds Ltd have come closer to reaching a break-even level of profitability. Combining the companies' businesses with Elite includes significant administrative and IT-related cost synergies that are expected to be realised within 6 to 12 months.

The major part of the acquisition is paid by issuing new series A- and series B-shares to Alfred Berg Asset Management AB, which shares are later transferred to BNP Paribas Asset Management Holding. The Seller will receive 2 033 518 A-shares and 406 704 B-shares in total, which will represent 19% of all the shares and 21.7% of all votes after the transaction. The new B-shares represents 11.5% of all B-shares after the transaction. The total amount of A- and B-shares after the issue is 12 843 272. In addition to the shares issued, the acquisition will include a cash consideration of approximately 1.85 million euro that is finally determined and paid to the Seller after the transaction.

The transaction does not require additional financing for Elite as the payment is made by issuing new shares. Elite thus cancels its earlier announced plans of emitting a bond during 2017 (announced on 22 December 2016).

Elite plans to fully integrate the acquired companies with Elite's other functions. This might involve restructuring within the group through a merger or transfer of business. Any decisions regarding these intra-group reorganisations measures will be announced separately.

The requisite permissions of the Finnish Financial Supervisory Authority were obtained prior to the transaction.

New shareholder agreement and update to the conversion schedule of A-shares

In conjunction with the transaction, all series A-shareholders (including the Seller) and Elite have signed a shareholders' agreement. Elite's series A-shareholders hold the majority of the voting power in the company. The shareholders' agreement includes provisions on corporate governance including limiting the number of board members to a maximum of six and giving AB a right to nominate a board member for election by the general meeting of the shareholders, and requiring the consent of the board member nominated by AB for certain major corporate action such as the delisting or liquidation of the company, and significant related party transactions. The agreement also sets limitations on transfer of series A-shares and customary tag-along and drag-along provisions. Further, Elite has an obligation to redeem the shares held by AB at the three months volume weighted average share price of Elite's class B-share, in case the distribution agreement regarding BNP Paribas Asset Management's investment products is terminated before the end of its term. The shareholders' agreement does not include provisions that could lead to series A-shareholders to be considered in acting as one shareholder.

Also, the conversion schedule of series A-shares has been updated. Previously the major shareholders (Elite Partners Oy, Nousukaari Oy, Daniel Pasternack and Rami Niemi) had agreed not to fully exercise their right to convert series A-shares to series B-shares before 1 January, 2019. The updated schedule involves all holders of series A-shares and states that 60% of all series A-shares will be converted to series B-shares during 2018-2020 (20% of the series A-shares each year). In 2020, the remaining series A-shares may be converted following a request of series A-shareholders, and after this, the remaining series A-shares may be converted by a board decision. In 2024, each series A-shareholders may convert their remaining series A-shares.

ELITE ASSET MANAGEMENT PLC
Board of Directors

Further information:
Elite Asset Management Plc

Daniel Pasternack, CEO
+358 50 569 3416
daniel.pasternack@elitevarainhoito.fi

Kari Juurakko, Chairman of the Board
+358 50 582 7411
kari.juurakko@elitevarainhoito.fi

Certified Advisor Merasco Oy
Telephone: +358 9 6129 670

Elite Asset Management Plc is a profitable and growing investment service company that offers versatile and high-quality asset management services for both consumer and professional investors. Elite Asset Management Plc is listed on the First North Finland market maintained by NASDAQ Helsinki (Helsinki Exchanges). Elite Asset Management Plc is the parent company of the Elite Group (Elite). Elite's customer base consists of individuals and corporations that the company serves nationwide in 13 different locations. The first company belonging to the current Elite Group was founded in 2000. Elite employs about 80 investment professionals and offers over 30 tied agents to the Group's services. On behalf of its clients, the company manages assets of approximately EUR 1.6 billion in total. Check out Elite's services at www.elitevarainhoito.fi.

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