Highlights
– Realisation of Besso investment
– Follow-on investments in Nexus and LEBC
– Investment in Asia Reinsurance Brokerage Pte, Singapore
– Start-up MGA investments in UK (Fiducia) and Canada (SSRU)
– Return of £7.3m Equity & £6.04m Loans in cash from Hyperion
– Increase in upper limit for new investments to £5m
– Dividend of 3.76p for the year as part of a 3 year programme
– Increased opportunity pipeline
– £4.4m net cash available
The year has been one of strong performance and important developments for the Group.
The Group will have significant cash to deploy going forward following the return from the Hyperion disposal and, subject to completion, the proceeds of the exit from Besso.
The portfolio businesses are performing well and the Group increased its positions in Nexus and LEBC during the year.
The Group continued its geographic expansion with new investments in Singapore and Canada and continues to see North America as an area of interest.
The business also streamlined the portfolio by disposing of non-core holdings in Randall & Quilter and Broucour.
The new opportunity pipeline remains strong and, in recognition of the expected cash inflow from Besso, the Board has agreed an increase in the upper limit for new investments from £3m to £5m in first round funding.
The Board will continue to strike a balance between rewarding shareholders by generating value through investing funds in opportunities that will deliver long-term capital growth and a sustainable ongoing dividend.
The Company's share price has increased by c. 35% from 1 February 2016 to the current date, and there has been a narrowing in the discount to NAV at which the Company's shares trade in the same period. The Board notes this improvement and intends to build on this performance in the coming year.
Investment Activity
Disposals
Conditional Disposal of Besso
The Group announced on 4 January 2017 that it had reached agreement to sell its entire 37.94% shareholding in Besso Insurance Group Limited (“Besso”) for cash, with completion subject to, inter alia, regulatory approval. This is expected to result in estimated proceeds to the Group of £20.6m net of transaction costs and pre-tax. Additionally, the Group's outstanding loans with Besso will be fully repaid on completion. BGC Partners Inc. (“BGC”) has agreed to acquire 100% of Besso, with ongoing management and employees rolling over a proportion of their existing Besso shareholdings into BGC shares.
Since the Company's announcement on 4 January 2017 the Besso transaction continues to progress to completion, and the Group expects to receive additional funds of approximately £18.37m (after transaction costs and tax). All of the above calculations are based on the August 2016 balance sheet, for illustrative purposes. The adjustments will be calculated on the basis of a completion balance sheet, and therefore these figures are subject to change.
B.P. Marsh's investment in and exit from Besso demonstrates the success of its strategy of investing for the long-term and working with management teams to achieve a mutually desirable exit at the optimum time.
Disposals of Broucour and R&Q
On 22 April 2016, the Group sold its 49% stake in The Broucour Group Limited (“Broucour”). Additionally, on 4 May 2016, the Group sold its 1.32% stake in Randall & Quilter Investment Holdings (“R&Q”). These decisions were made as the Group believed that these investments were non-core holdings.