Partners and staff at listed law firm Gateley sold £11m worth of shares yesterday – making £27m since it went public – after an oversubscribed placement saw them make more available than planned.
It is the third share sell-off since the firm listed in 2015 – this time last year, partners and staff sold four million shares at 150p, raising £6m. In October 2017, internal shareholders sold 6.6m shares at 150p for £10m.
This has steadily diluted the partners’ ownership of the national firm, which stood at 70% when it went public.
At the start of yesterday, the firm said “certain directors and employees” planned to sell 4.75m shares at 200p – representing 4.1% of Gateley’s issued share capital – but by the close of the accelerated bookbuild, they had sold 5.5m to institutional investors.
“The placing is being undertaken in order to satisfy market demand and broaden the institutional investor base of the company,” investors were told.
Under the terms of the lock-in agreements partners signed when Gateley was admitted to AIM in 2015, they could sell 10% of their shares in any 12-month period after the first anniversary of admission.
Michael Ward, chief executive of Gateley, said: “I am delighted that as a result of strong investor demand we have placed 5,500,000 shares with both existing and new shareholders. We thank existing holders for their continued support and welcome new holders to the Gateley register.
“As a result of the placing we have increased the free float of the company and have once again broadened our investor base.
“The placing is in line with the board’s commitment to allow and incentivise our partners and employees to realise part of the value they have helped to create in an orderly fashion, and at a price one third higher than the Company’s previous realisation event.
“In this way both shareholders and employees can share in the significant progress Gateley has made in the last year.”
Our annual analysis of listed legal businesses last month showed that 2019 was Gateley’s best year as a public company yet, and earlier this month it reached a new peak of 218p. It was down 6p to 207p yesterday.
Last October, almost all of Gateley’s share-owning partners locked themselves in for a further five years on the same terms from 8 June this year, and Mr Ward said this created “a stable and structured platform from which internal and external shareholders can invest with confidence”.
A series of other schemes came to fruition last year. A second stock appreciation rights scheme vested resulting in nearly a million additional new shares (net of tax liabilities) being awarded to partner-level staff. This has now been replaced by a long-term incentive plan.
The first SAYE scheme also vested in October, delivering a 70% return on staff investments and 800,000 shares across all staff levels. Gateley’s initial middle management company share option plan matured in December 2019 to the benefit of staff.
In other listed law firm news, ultra-acquisitive Knights – which has announced three deals this year alone – is set to break into the list of the top-50 AIM-listed businesses by capitalisation next week.
Its rapid growth and soaring share price mean that it has a market capitalisation of £356m – having been £104m when it listed in June 2018 – compared to Gateley’s £246m. Knights’ share price has risen in that time from 145p to 499p.
Knights is expected to replace accident management company Redde in the FTSE AIM 50 Index next Monday after its merger with Northgate plc completes. Redde owns two alternative business structures (ABSs): New Law Solicitors and Principia Law.
Northgate – a listed light commercial vehicle hire business – announced last week that the Solicitors Regulation Authority has joined the Financial Conduct Authority in approving the merger. It is now subject only to court approval of the scheme of arrangement later this week.
The combination should provide the ABSs with a much increased referral network.
Finally, the ABS owned by New York-listed Crawford & Company – which provides claims management and outsourcing services to insurance companies and self-insured entities – is set for significant expansion.
Crawford Legal Services, which was set up in 2016 and currently employs more than 40 people in Liverpool and Manchester, is opening new offices in Leeds and Birmingham, “with more growth targeted over the next 12 months”, it said in a statement.
The new operation in Birmingham will focus on building a cross-class recovery and subrogation team, including its counter-fraud services team, “as the company looks to enhance its offering with a lawyer-led, end-to-end fraud solution”.
Jason Spencer, managing director of Crawford Legal Services, said: “Crawford Legal Services is entering a period of accelerated growth. Since the launch of CLS in 2016, we have achieved phenomenal success and today’s announcement forms part of our ongoing efforts to expand our capabilities to meet increasing client demand.
“Our unique approach, operating as an independent alternative business structure while being fully embedded within the core activities of Crawford UK, enables us to offer a unique operating and commercial model, to develop highly customer-focused solutions and provide a fully integrated single-supplier service that delivers on our mission to restore and enhance lives, businesses and communities.”