TIDMCPP
RNS Number : 6728U
CPPGroup Plc
27 November 2023
27 November 2023
CPPGroup Plc
("the Group"; or "the Company")
Globiva Divestment
CPP Group (AIM: CPP), a provider of real-time assistance
products and resolution services which reduce disruptions to
everyday life for millions of customers across the world, has
entered into an agreement (the "Agreement") with the founders of
Globiva Services Private Ltd ("Globiva") for the disposal of the
Group's majority interest in Globiva for an aggregate consideration
of approximately GBP5.1 million(1) (the "Transaction"). Globiva is
non-core to the Group following the announcement of its revised
strategy and Change Management Programme ("CMP") in October 2022 to
transform the Group to an InsurTech business, led by Blink
Parametric ("Blink").
Background
The Group holds a 51% majority interest in Globiva, a Business
Processes Management company incorporated in India, with the other
49% of the shares beneficially owned by the three founders of
Globiva, Navneet Gupta, Vikram Singh Nathawat, and Ashish Goyal,
who continue to manage the business (the "Globiva Founders").
Under amended arrangements entered into on 20 July 2022, the
Globiva Founders had the option to buy back 10% of the ordinary
shares in Globiva, from the Group, for a pre-agreed price of
approximately GBP0.9 million. This was subject to Globiva meeting
certain performance targets, which it is on track to achieve.
However, in the normal course of business, it was further agreed
that this could not be triggered until 1 January 2026 at the
earliest. This Agreement supersedes the previous arrangements.
Transaction Rationale
-- The Transaction is consistent with the Group's stated
strategy to transform the Group to an InsurTech business led by
Blink and supported by India and Turkey.
-- The Group is currently a "trapped" investor in Globiva with
limited options to realise value. In addition, the Group was likely
to become a minority shareholder (January 2026) and consequently
would have lost majority voting rights on key strategic decisions.
The Transaction provides an exit path for the Group at an
acceptable return.
-- The Transaction provides cash flow, not previously forecast,
over a three-year period to support the Group's CMP.
Transaction Structure
-- The sale and transfer of ownership will be conducted over a
three-year period concluding in Q1 2027.
-- The total aggregate consideration of approximately GBP5.1
million(1) (515 million Indian rupees) represents a blended 7.1x
multiple on forecast EBITDA for the 2023, 2024 and 2025 calendar
years. Final consideration will be based on audited EBITDA and
subject to a maximum adjustment of plus or minus ten percent.
-- The Group's shareholding in Globiva, currently 51%, will
reduce to approximately 35% in Q1 2025; 13% in Q1 2026; and zero
percent in Q1 2027.
-- Cash, subject to any EBITDA performance adjustment (noted
above) will be received by the Group as follows: approximately
GBP1.2 million in 2024; GBP1.3 million in 2025; GBP1.2 million in
2026; and GBP1.4 million in 2027.
For the 2022 financial year, Globiva contributed EBITDA of
GBP2.4 million to the Group's overall EBITDA from continuing
operations of GBP6.9 million, albeit the Group's shareholders only
ultimately benefit from 51% of Globiva's results. As at 30 June
2023, Globiva had net assets of GBP3.6 million.
The Transaction constitutes a related party transaction,
pursuant to Rule 13 of the AIM Rules for Companies, as the Globiva
Founders are Directors of Globiva. The Group's Directors consider,
having consulted with the Company's nominated adviser, Liberum
Capital Limited, that the terms of the Transaction are fair and
reasonable insofar as the Company's shareholders are concerned.
Simon Pyper, Group CEO, commented:
"The agreement we have reached with Globiva is consistent with
our stated strategy and provides a positive outcome for both
parties. This is another forward step as we simplify the Group and
transform to an InsurTech business."
(1) Approximate, as subject to currency exchange movements.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as amended by The
Market Abuse (Amendment) (EU Exit) Regulations 2019. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Enquiries:
CPP Group plc
Simon Pyper, Chief Executive Officer Tel: +44 (0)7917 795601
David Bowling, Chief Financial Officer
Liberum Capital Limited
(Nominated Adviser and Sole Broker) Tel: +44 (0)20 3100 2000
Richard Lindley
Lauren Kettle
About CPP Group:
CPP Group is a technology-driven assistance company that creates
embedded and ancillary real-time assistance products and resolution
services that reduce disruption to everyday life for millions of
people across the world, at the time and place they are needed, CPP
Group is listed on AIM, operated by the London Stock Exchange.
For more information on CPP visit
https://corporate.cppgroup.com/
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END
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