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Schroder British Opportunities generates first cash from its private equity portfolio

221103 SBO Culligan Waterlogic merger

Schroder British Opportunities Trust (SBO) has announced that the merger between Culligan International and Waterlogic Group Holdings (an SBO holding) has completed. As result of the merger agreement, SBO will receive £2.38m in cash, which represents 3.2% of its NAV as at the 30 June 2022. The NAV of the Waterlogic investment in SBO already reflects the agreed transaction terms less a small discount for uncertainty. The completion of the merger is somewhat of a milestone for SBO as this sees it report its first cash generation from its private equity portfolio.

Meaningful minority position retained

SBO says that the company is well-positioned to expand further in the growing US$35bn consumer water market and existing investors in Waterlogic continue to hold a meaningful minority ownership position in Culligan post merger. SBO’s investment in Waterlogic was made through the EPIC I-b Fund SLP, a single asset fund managed by Castik Capital, that has increased by 44% since inception. It is currently a top-3 SBO holding by size.

Creating a world leading in sustainable drinking water solutions

SBO believes that the merger will create a world leader in sustainable drinking water solutions, facilitating a reduction in the use of single use plastics which delivers against the United Nations Sustainable Development Goals, one of the key investment criteria for SBO. The combined business will operate under the Culligan name and will have over 11,000 employees operating across 30 countries generating annual revenues of around US$2.4bn. SBO’s managers say that it is their intention to reinvest this cash as they continue to see compelling opportunities and value across both private and public markets.

Comments from Tim Creed, SBO’s portfolio manager

“We are delighted to see the completion of this merger which has generated a global leader in sustainable drinking water. SBO will remain a shareholder as the combined business has considerable potential for future growth. We are also pleased to report our first cash generation from the SBO Private Equity portfolio.”

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