Listed trust Honeycomb today announced that it will acquire the entire share capital of Pollen Street in exchange for shares in the company.
The deal will create a combination of the two entities into a ‘premium listed commercial company’ according to a market release put out by Honeycomb.
The combined company will therefore no longer be a trust as Honeycomb is currently, with a commercial company categorisation being more apt to describe the new entity’s ‘growth trajectory’ according to the firm.
The firms are hoping for increased liquidity from the merger, a larger market cap and with it a hopeful inclusion into the FTSE 250.
The deal is also believed to deliver a compelling revenue profile, with an attractive balance of interest income from Honeycomb and recurring fees and fast growth from Pollen Street.
There is also hope that the merger has the potential for significant re-rating and valuation upside. The combined group will be entitled to 25 percent of the total carried interest entitlement in the most recent flagship private equity and credit funds of Pollen Street, as well as 25 percent of the total carried interest entitlement in all future funds established by Pollen Street.
Major investors in Honeycomb such as M&G have already given their asset to the deal, with the asset manager having provided a letter of intent to vote in favour of the resolutions required to approve and implement the combination in respect of its 2,121,577 Honeycomb shares.
Robert Sharpe, the chairman of Honeycomb, said: "I am delighted that we have reached an agreement to combine Honeycomb and Pollen Street. The combination has a compelling strategic rationale, which will deliver strong operational and financial benefits, and generate future growth opportunities.
“This, alongside an attractive entry valuation, create potential for significant re-rating and valuation upside. The shares will also become more appealing and accessible for a wider range of investors. The clear strategic and financial logic of the transaction is evidenced by the significant shareholder support we have already received."
Lindsey McMurray, the managing partner of Pollen Street, added: "Since inception in 2013, Pollen Street has built deep capability across the financial and business services sector aligned with the mega-trends that are shaping the future of the industry as well as building a high-quality institutional infrastructure and an eco-system of expertise and knowledge through its Hub.
“The transaction represents an exciting opportunity to build upon our strong foundations and further develop the institutional platform of Pollen Street as well as provide capital to support the development of our strategy to build a purpose-led asset management firm. The Combined Group is well placed to capitalise on the structural changes in the financial services industry and projected growth in alternative asset management to deliver value for all stakeholders."
