Dunedin Enterprise Investment Trust to merge with Group Trust

Dunedin Enterprise Trust has made a recommended offer to acquire Group Trust in a paper offer of 182 Dunedin Enterprise shares per 1000 Group shares with a value at announcement of 56.5p per share, with a partial cash alternative of 58p a share. The offer, which is subject to shareholder approval, values Group at £31m and will result in a merger of the two trusts. Dunedin Capital Partners, the existing manager of Dunedin Enterprise, will continue to manage the enlarged company, which will retain the Dunedin Enterprise name. Subject to completion, the merger will result in Dunedin Capital Partners increasing its assets under management to £120m, giving it the fire-power to target a greater number of deals at the top end of its £5-25m investment remit.

Group and Dunedin Enterprise have complementary investment remits, each supporting MBO and MBI situations across the UK. However, because Group is managed by Legal & General Ventures, it generally participates in much larger deals, investing alongside the institution’s other funds under management. In light of its size, compared to other LGV managed funds, Group’s participation in investments is generally quite small, with minority shareholdings of between 2-4% acquired per investee company. In contrast, as part of Dunedin Enterprise, Group will have the opportunity to participate as lead investor in deals, acquiring controlling equity stakes in its investee companies, in line with Dunedin Capital Partners existing strategy. It is intended that Group’s existing investments will be realised by LGV and the cash reinvested in the types of mid-market companies Dunedin has historically targeted.

Dunedin Enterprise and Group Trust were natural candidates for a merger, not only because of their complementary investment remits, but because they share a common link with Legal & General. As well as managing Group Trust and holding 51% of its share capital, Legal & General holds a 31.8% interest in Dunedin Capital Group, the holding company of Dunedin Capital Partners; it also has an 18% shareholding in Dunedin Enterprise. Legal & General acquired its stake in 1996, when Legal & General Ventures supported the buyout of the Dunedin team from Edinburgh Fund Managers. Following the completion of the Group/Dunedin Enterprise merger, Legal & General will own approximately 26% of the enlarged Dunedin Enterprise.

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• Topics
• GPs
• UK / Ireland