STM Group, the cross-border financial services provider, has sold its Jersey based trust and company services businesses to privately-owned Guernsey-headquartered Imperium Group for a cash consideration of £1.40m.
The sale completes its strategy to focus on its core activities of pension administration and life assurance, STM announced today (10 May).
The sale proceeds will further contribute towards funding organic growth opportunities and build on cash resources for further M&A activity, it said, while for Imperium it would be "a clear statement of its intentions to have a solid business platform in Jersey as well".
For STM, exiting the Jersey trust and company businesses is an important deliverable to allow the executive to focus on our core activities of pension administration and provision of life assurance wrappers."
The Jersey sale businesses comprise STM Fiduciaire and "a number of non-revenue generating support companies, including nominee companies", which generated combined revenue of £1.48m during 2020 and made a profit before tax contribution of £0.10m to STM Group's 2020 profits.
STM Jersey "was very much a stand-alone business", STM Group said, resulting in "minimal shared group costs that will need to be absorbed within the remaining group".
Alan Kentish, CEO of STM Group, said: "We are delighted that the Jersey businesses and our colleagues that work within them, as well as our clients, have gone to a good home at Imperium. Imperium have confirmed that there will be minimal changes, whilst at the same time bringing new business opportunities, and I am confident that this will ensure a smooth and seamless transition to new ownership.
"For STM, exiting the Jersey trust and company businesses is an important deliverable to allow the executive to focus on our core activities of pension administration and provision of life assurance wrappers. The additional cash resources will allow for further investment in our organic growth initiatives, as well as further potential M&A activity."
The sale has two staged consideration payments totalling £1.86m, with the amount payable upon completion being £1.26m, with the final payment of £0.60m being paid six months after completion.
Cash of £0.46m will be left within the sale companies representing the Jersey capital requirement, giving a net minimum cash consideration of £1.40m.
In addition, the sale agreement allows for a further consideration payment of 50% of any revenue surplus above £1.15m of revenue that is categorised as recurring revenue. This calculation will be based on the twelve months trading from date of completion.
STM further added that "certain net assets relating to debtors and work-in-progress are ringfenced by the sale companies for the benefit of STM, and these will be paid as these assets are converted to cash at bank. It is anticipated that this will amount to £0.42 million and will be principally received in the first six months post completion."
Following regulatory approval from the Jersey Financial Services Commission, the signing of the sale and purchase agreement and subsequent completion took place on 8 May 2021.