
Permira to buy Hong Kong-based corporate services provider for $835m
Permira has agreed to buy Tricor Holdings, a Hong Kong-headquartered business, corporate and investor services provider, from Bank of East Asia (BEA) for HK$6.47 billion ($835 million).
It adds to an already considerable private equity presence in the corporate services space globally, which remains highly fragmented and is expected to see more consolidation. Last year, Baring Private Equity Asia bought Vistra Group - said to have been among the bidders for Tricor - and the company continues to make bolt-on acquisitions.
The deal values Tricor at 15x earnings, based on EBITDA of approximately $55 million in 2015, although the total consideration includes at least HK$400 million in cash. Permira will acquire BEA's 75.61% stake in the company, plus a 24.39% interest held by NWS Holdings, a Hong Kong-listed infrastructure and services business controlled by local conglomerate New World Development.
BEA announced in February that it would conduct a strategic review of its Tricor holding. The bank has come under pressure from shareholders in recent months, with activist hedge fund Elliott Management accusing the lender of mismanagement and calling for it to consider a sale. BEA will use the proceeds to improve its capital position and pursue strategic opportunities relating to its core banking business.
Founded in 2000, Tricor has more than 2,000 staff in 37 cities across 20 countries and territories. There is a strong focus on serving multinational and small and medium-sized enterprise clients in Asia Pacific. The outsource functions include company incorporation, administration and secretarial services; trust and fiduciary services; share registry management; and accounting and payroll services.
The company reported net asset value of HK$1.99 billion for the year ended December 2015, up from HK$1.98 billion the previous year. Over the same period, net profit climbed to HK$292.8 million from HK$276.7 million.
"The acquisition fits squarely into the Permira funds' global strategy of investing in market leaders with high recurring revenues and strong cash generation in structurally growing markets," said Robin Bell-Jones, a Hong Kong-based partner with the private equity firm, said in a statement. He added that Tricor should serve as a platform for industry consolidation through M&A in addition to pursuing organic growth.
Permira's existing exposure to financial and professional services businesses includes US online legal services provider LegalZoom, wealth manager Tilney BestInvest and receivables manager GFKL Lowell. The latter two, both based in Europe, are pursuing combined organic growth and buy-and-build strategies that the GP expects to replicate with Tricor. Permira is currently raising its sixth global fund, which reached a first close of about EUR6.3 billion ($6.9 billion) in June. The hard cap is EUR7.2 billion.
The leading global corporate services providers - which overlap with Tricor to varying degrees - are all owned by private equity. TMF, a Doughty Hanson portfolio company since 2008, is the largest, having absorbed the likes of Equity Trust and KCS. Intertrust, another major player, was bought by The Blackstone Group in 2012 and has subsequently bolted on ATC Group, while Citco is part-owned by General Atlantic.
Baring acquired Vistra from IK Investment Partners, which created the business by acquiring the Offshore Incorporations group of companies from The Carlyle Group in 2011 and combining it with Vistra Group. Shortly after the Baring buyout, the company acquired Orangefield Group from AAC Capital Partners. Purchases since then include India-based Ujwal Management Services.
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