Nick Sarker has just overseen an unusual tripartite corporate deal involving a £20m convertible loan facility, a partial offering and a £7.3m merger with a North American company. The deal, announced on 24 August, involved disparate companies from the UK, the US and New Zealand. Impressively, Sarker emerged virtually unscathed, with the only casualty being a cancelled Devon holiday.
Sarker is general counsel and company secretary at Hemscott, a small AIM-listed data company involved in the collection, redistribution and licensing of UK and Ireland-focused company data for more than a third of FTSE 100 companies. He is the sole lawyer at the company and is also involved in Hemscott’s finance arm, which is treated as an autonomous unit together with legal.
In February, Hemscott targeted and subsequently acquired CoreData, a similar data company operating in Virginia and owned by US private equity fund VS&A.
“It has been difficult for us to develop organically in other jurisdictions,” says Sarker. “We found CoreData, which was a similar company to us, but had data relating to the US and Canada, and which was at a much earlier stage in development than Hemscott.”
The acquisition of CoreData represented a major shift in Hemscott’s strategy. The combination created an international network of finance data and applications providers with 26,000 companies on its database, 30 years of US and 20 years of UK corporate annual financial information, providing Hemscott with the platform to move into the US.
The transaction was complex and unusual. Through the partial offer, CoreData’s former indirect majority shareholder CentrePoint Data acquired a 54 per cent stake in Hemscott. CentrePoint Data bought 10 million shares from majority Hemscott shareholder FinMedia, a New Zealand company, in an effort to give Centrepoint Data a majority interest in Hemscott. Short-cutting some of the usual processes, FinMedia underwrote the partial offer to facilitate the deal and remains a sub-shareholder in Hemscott.
CentrePoint Data’s majority shareholder is New York media-focused merchant bank Veronis Suhler Stevenson (VSS). Hemscott, armed with its new US subsidiary, can now sell US data in the UK with the backing of VSS, and has access to a £20m convertible loan for use in further acquisitions. VSS can participate without the overall shareholding balance being diluted.
“Over the past few years the investor climate has been fairly cold,” says Sarker. “This is the deal we’ve been waiting for for a long time, and after all our hard work, the business will be transformed.”
The deal was also notable as it marked a change in external firms. Richards Butler, historically Hemscott’s adviser, was replaced by Norton Rose. Sarker is non-committal on the subject. “I think that if you get too pally with firms then they can take you for granted,” he says. “With the partial offer, we looked at six firms. Norton Rose seemed to be good quality and had been personally recommended to me. As a loss-making company we had to put conditions on the work. Norton Rose responded most positively to that.”
He points out that Norton Rose did not disappoint him. Elements such as responsiveness, good junior people, the firm’s skill at handling politics and US/UK cultural issues are all enthusiastically recalled.
And as to the future? “We will wait and see regarding the future use of external firms,” he says. “Officially we’re considering other investment opportunities because we have lots of money in the bank at the moment. We don’t feel obligated to anyone. It’s a harsh environment out there.”
Sarker joined Hemscott from the IT litigation department at Masons, “just as the internet bubble was bursting”, he says.
Hemscott, described by Sarker as a “young, techy company, proactive and agile,” is currently loss-making. However, post-deal, he says the business pipeline is full. “We’re looking to bulk up, but we’ll not lose sight of the managing process and strategic aims. My job is about helping bring it all together. Being in-house suits me. I like the commercial environment and meeting the needs of the client. In-house, the law becomes a means to an end,” he says.
Head of legal: General counsel and company secretary
|Sector||Financial information supplier|
|Head of legal||General counsel and company secretary Nick Sarker|
|Main law firms||Richards Butler, Norton Rose, Osborne Clarke, Laytons|