Quintain announces that it has acquired the specialist central London strategic property adviser, Grafton Advisors (2006) LLP ("Grafton"), for a cash consideration of £5.75 million (6.87 mln.). Grafton's principal business activity is to act as property adviser to the West End of London Property Unit Trust ("WELPUT"). WELPUT is a leading institutional investment fund that owns a high quality portfolio of predominantly office properties in London's West End. Schroders acts as manager to the Fund which, as at 31 December 2011, had gross assets of £872.2 million.
Through the acquisition of Grafton, Quintain has increased assets under management to £2.3 billion, surpassing its strategic target of £2.0 billion (2.4 bln.) twelve months ahead of schedule. The transaction will also increase the Group's recurring income, deliver upside potential through performance and development fees and add a second pooled investor fund to the Fund Management business alongside Quercus, Quintain's long-term healthcare fund.
The Grafton management team (the "Grafton Team"), comprising Nigel Kempner, Paul Connellan and Christopher Cope, will join Quintain together with three employees, increasing the breadth and depth of specialist sector knowledge within the Group. The team has an outstanding track record of delivering value for investors. The principal role of the team will be to continue to advise WELPUT, and Nigel Kempner will also become Head of Fund Management at Quintain.
In addition to the cash consideration, the Grafton Team will be issued with Unsecured Loan Notes ("Loan Notes") which will be redeemable to the extent that certain fees, including performance fees arising from WELPUT, are earned over the next five years. These qualifying fees will be shared equally between the Grafton Team and Quintain, with the maximum amount receivable by the Grafton Team being £5.0 million. The Loan Notes will carry a 2% coupon from the date of issue and the holders will have the right to apply the proceeds in subscribing for Quintain ordinary shares at a price of 55 pence per share, representing a 30% premium to the volume weighted average price for the five days to 27 February 2012.
Commenting on the acquisition, Adrian Wyatt, Chief Executive of Quintain, said: "The acquisition of Grafton achieves our strategic objective of increasing assets under management to well above our £2.0 billion target, 12 months ahead of schedule. The transaction enhances the Group's recurring income, offers substantial upside potential through performance and development fees and increases the breadth and depth of expertise within Quintain. Nigel Kempner's experience and track record in the property sector is extensive and we look forward to the contribution that he and his team will undoubtedly make to the Group's future success."
Commenting on the transaction, Nigel Kempner, Chairman and founder of Grafton, added: "I am delighted that Grafton is becoming part of Quintain, which I consider to be one of London's leading regeneration specialists. Joining forces with Quintain's Fund Management business is a highly positive step for both parties, bringing expertise in a further specialist sector to Quintain while giving the Grafton team access to wider resources that will support our record of delivering outperformance. We look forward to becoming an integral and valuable part of the Quintain business."