Caledonia Regulatory News (CLDN)

CALEDONIA INVESTMENTS AGREES TO TAKE A MINORITY STAKE IN STONEHAGE FLEMING

Caledonia Investments plc ("Caledonia") is pleased to announce that it has agreed terms to acquire a minority stake in Stonehage Fleming Family & Partners Ltd ("Stonehage Fleming"), one of the world's leading independently owned family offices.

Stonehage Fleming was formed in 2015 through the merger of Stonehage Group and Fleming Family & Partners. Stonehage Fleming is the largest family office in EMEA and the second largest non-bank provider of family office services globally, a market which is estimated to be growing at around 9% per annum, driven by the rising demand of ultra-high net worth families for assistance in the organisation of their wealth.

Caledonia's investment will be structured by way of a tender offer made to all of Stonehage Fleming's shareholders, that will take place in conjunction with a share buy-back offer by Stonehage Fleming and will result in Caledonia acquiring 36.7% of the fully diluted capital. The transaction is conditional on obtaining regulatory approvals in a number of jurisdictions, which are expected within three months.

The exact consideration payable by Caledonia on completion will be dependent on the precise number of shares to be acquired in order to achieve the 36.7% stake, but will be approximately £92m. Caledonia has also agreed to pay additional deferred consideration of up to a maximum of £20.6m, contingent on Stonehage Fleming achieving certain financial targets for its years ending 31 March 2020 and 2021. To expedite the tender offer, Caledonia has further agreed to underwrite a £30m term loan facility for Stonehage Fleming as part of the funding of the transaction, although it is expected that a third party facility will be put in place with major international banks prior to completion of the transaction or shortly thereafter.

Caledonia will be investing alongside Stonehage Fleming's existing shareholders, including the incumbent management team, whose principal executives are Giuseppe Ciucci (Group Chief Executive Officer), Ari Tatos (Managing Partner) and Ian Crosby (Partner - Chairman, Jersey). All of the management team will remain with the business following completion and they, together with other members of staff, will retain ownership of approximately 50% of the share capital. Caledonia will benefit from certain minority protections in relation to its shareholding, including agreed dividend policies and the structuring of its shares as preferred shares ranking in priority to the other shareholders in certain circumstances in terms of capital invested. Two members of Caledonia's Unquoted team will also join Stonehage Fleming's board.

Commenting on the acquisition, Duncan Johnson, Caledonia's Head of Unquoted Investments, said:

"The increasingly complex ultra-high net worth market offers very attractive long term growth dynamics, which will offer significant opportunities to Stonehage Fleming given its breadth of service and geographical reach. This transaction fits our strategy of investing in well-established private companies, with proven management teams, offering long term capital growth potential, as well as strong cash generation to support an attractive dividend yield.

"Caledonia had a very successful investment in Robert Fleming Holdings in the decade up to its acquisition by Chase Manhattan Bank in 2000 and we are delighted to have again become involved in its successor business. We look forward to working with Giuseppe and the team to build further on Stonehage Fleming's success in the years to come."

Giuseppe Ciucci, Stonehage Fleming's Group Chief Executive, commented:

"Today's rapidly changing world offers great opportunity and challenges to wealth creators and we believe there is considerable scope for Stonehage Fleming to develop its services further to help our clients protect their wealth and manage family succession. We are delighted to have found in Caledonia a long term financial partner with a similar ethos and heritage to our own, as we pursue our ambition to become the leading independent global family office."

21 December 2018

For further information contact:

This announcement contains inside information in relation to Caledonia.

END

Notes for editors:

Caledonia Investments plc

Caledonia is a self-managed investment trust company listed on the London Stock Exchange with net assets of £2.0bn as at 30 November 2018. The company maintains a concentrated portfolio of international quoted, unquoted and fund investments and has paid an increasing annual dividend for 51 years.

In the unquoted arena, Caledonia typically seeks to invest £25m to £100m in private companies, either on a majority or minority basis, providing a meaningful presence and growth capital supporting double-digit operating margins. Its current unquoted portfolio includes Seven Investment Management (a provider of discretionary fund management, asset management and self-invest platform services), Deep Sea Electronics (a manufacturer of precision engine and generator controls and intelligent battery chargers), Cobehold (a European unquoted investment house), Cooke Optics (a UK manufacturer of premium cinematography lenses), Buzz Bingo (the UK market leading retail bingo operator), and Liberation Group (a Channel Islands and South West England integrated pub and brewing business).

For additional information on Caledonia, please visit www.caledonia.com.

Stonehage Fleming Family & Partners Ltd

Stonehage Fleming is one of the world's leading independently owned family offices, formed in 2015 through the merger of the Stonehage Group and Fleming Family & Partners. Headquartered in Jersey, it employs over 500 people and provides administration and investment services for over $55bn of assets on behalf of more than 250 families, served from 11 offices in 8 geographies, with the principle objectives of protection of family wealth and management of family assets. In its year to 31 March 2018, Stonehage Fleming reported profit before tax of £16.4m and at that date had gross assets of £116.1m.

For further information on Stonehage Fleming, please visit www.stonehagefleming.com.

Transaction

Caledonia's investment in Stonehage Fleming was led by Tim Lewis, Charles Edwards, Duncan Johnson and Ben Woolley.

Travers Smith (Ian Shawyer, Adam Orr and Genevieve Marten) provided legal due diligence and advice to Caledonia. PwC (Steve Jones, Neil Bindoff, Wan Ming Lee and Fredrik Johansson) undertook financial and commercial due diligence, Duff & Phelps (Sebastian Petsas and Andrew Lowin) undertook regulatory due diligence and Intuitus (Richard Irwin and David Ford) undertook IT due diligence. Deloitte (Tim Haden) provided tax advice.

Stonehage Fleming was advised by Macfarlanes (Howard Corney and Alex Green) and Spencer House Partners (Jeremy Sillem and Andrew Malcolm).