Shopping Cart

Centricus Acquisition Corp.

Centricus Acquisition Corp.

Dec 31, 2020 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: Arqit Limited

ENTERPRISE VALUE: $1.026 billion
ANTICIPATED SYMBOL: ARQQ

Centricus Acquisition Corp. proposes to combine with Arqit Limited, a leader in quantum encryption technology.

Arqit has pioneered a unique quantum encryption technology, QuantumCloud™, which makes the communications links of any networked device secure against current and future forms of hacking – even an attack from a quantum computer.

Currently “public key infrastructure” or “PKI” is used to encrypt most of the world’s communications, however PKI was designed in the 1980s and is no longer fit for purpose in a hyperconnected world. Furthermore, within this decade quantum computers will likely be able to break PKI’s encryption algorithms.

Symmetric encryption is a well understood encryption technology that is known to be more secure than PKI, including against quantum attack. However to date there has been no secure way to distribute symmetric encryption keys at scale. Arqit has invented a way to create those keys at end points when they are needed, at scale, securely, at any kind of end point device and in groups of any size. Arqit’s product, QuantumCloud™, is symmetric encryption, reborn for the cloud.

QuantumCloudTM puts a small software agent at any end point device. This software creates an unlimited number of symmetric keys with partner devices. The process is very simple and fast. Currently Arqit’s system uses source keys which are originated in data centres, however by 2023 it plans to launch two quantum satellites to assume that role. Those satellites will use a transformational new quantum protocol invented by Arqit which solve all of the known problems of satellite quantum key distribution. They will create a backbone of secure keys within data centres all over the world, and a quantum safe boundary protecting those data centres.

A customer/user can create an infinite number of symmetric key pairs, in groups as large as are needed. Keys are never “delivered”, so they cannot be intercepted. They are created at the end points and therefore can never be known by third parties. They can be used only once if necessary and replaced frequently. The service is sold and fulfilled on a self-service basis in the cloud making it an easily scalable business model.

Arqit’s current customers include the UK Government, the European Space Agency, BT plc, and Sumitomo Corporation. In addition, many companies like Verizon, BP, Northrop Grumman and Iridium are currently testing the use of Arqit’s technologies in different use cases.

It is estimated that the global addressable market for information security and risk management will be approximately $194 billion by the end of 2024, as government, military, cybersecurity, telecoms and financial services players move at speed to protect themselves and their customers from critical security breaches.

SUBSEQUENT EVENT – 8-K Link

On October 4, 2021,  the former shareholders of Arqit Limited and Centricus Heritage, LLC, the sponsor of Centricus Acquisition Corp., have voluntarily entered into new lock-up agreements with the Company to signal their long-term support of the Company.

  • The new lock-up agreements will restrict the transfer of the Company’s shares by the parties from September 3 2021 until the earlier to occur of
    • (i) 11:59 p.m. Eastern time on the close of trading on the second full trading day following release by the Company of its financial results for the six months ended March 31, 2022
    • (ii) such time as determined by the board of directors of the Company as being in the best interest of all stakeholders to permit transfers.

TRANSACTION

  • The transaction values the combined company at a pro forma enterprise value of approximately $1.0 billion.
  • It is expected to provide up to $400 million of gross proceeds to Arqit from a combination of $345 million of cash held in Centricus’ trust account (assuming minimal redemption from Centricus existing shareholders).
  • Approximately $70 million from a fully committed PIPE.
    • In addition to financial investors, strategic investors Heritage Group, Virgin Orbit and Sumitomo Corporation have agreed to invest in the PIPE offering.
  • All existing shareholders and investors will continue to hold their equity ownership, and current Arqit shareholders will remain the majority owners of the combined company at closing.

At the Share Acquisition Closing, in consideration for the purchase of the Company’s share capital, Pubco will:

  • (1) pay to the Company Shareholders their Pro Rata Portion of the lower of
    • (i) the amount (which may be zero) by which the Parent Closing Cash exceeds $500,000,000, and
    • (ii) $90,000,000 (the “Cash Consideration”) (only if the relevant Company Shareholder has elected to receive Cash Consideration in accordance with the terms of the Business Combination Agreement); and
  • (2) issue to the Company Shareholders their Pro Rata Portion of an aggregate number of Pubco ordinary shares with an aggregate value equal to $900,000,000 less the Cash Consideration, if any (the “Exchange Shares”) (and only if the relevant Company Shareholder has elected to receive Cash Consideration in accordance with the terms of the Business Combination Agreement).
  • If the Condition (as defined below) is satisfied within three years following the Share Acquisition Closing Date, Pubco will issue to the Company Shareholders their Pro Rata Portion of 10,000,000 Pubco ordinary shares.

CENH trans overview

PIPE

  • Approximately $70 million from a fully committed PIPE at $10.00 per share.
    • In addition to financial investors, strategic investors Heritage Group, Virgin Orbit and Sumitomo Corporation have agreed to invest in the PIPE offering.

LOCK-UP

On October 4, 2021, the former shareholders of Arqit Limited and Centricus Heritage, LLC, the sponsor of Centricus Acquisition Corp., have voluntarily entered into new lock-up agreements with the Company to signal their long-term support of the Company. The new lock-up agreements will restrict the transfer of the Company’s shares by the parties from September 3 2021 until the earlier to occur of:

  • (i) 11:59 p.m. Eastern time on the close of trading on the second full trading day following release by the Company of its financial results for the six months ended March 31, 2022
  • (ii) such time as determined by the board of directors of the Company as being in the best interest of all stakeholders to permit transfers.

The Company’s shareholders, the Sponsor, Nicholas Taylor and Adam M. Aron will each enter into a Lock-Up Agreement with Pubco (collectively, the “Lock-Up Agreements”), pursuant to which, for a period commencing from the Share Acquisition Closing until the earlier to occur of:

  • (i) the date on which the closing price of the Pubco ordinary shares during such period exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any twenty (20) trading days during a thirty (30) consecutive trading day period (the “Condition”) and
  • (ii) eighteen (18) months after the Share Acquisition Closing, each holder will not transfer any of such holder’s Pubco securities.

NOTABLE CONDITIONS TO CLOSING

  • Centricus and Pubco having at least $150 million of cash either in or outside of the trust account, after taking into account payments by Centricus for the Redemption and any proceeds received from the PIPE Financing

NOTABLE CONDITIONS TO TERMINATION

  • By either Centricus or the Company if any of the conditions to closing set forth in the Business Combination Agreement shall not have occurred by the date falling six months from the date of the Business Combination Agreement (the “Outside Date”)

ADVISORS

  • Deutsche Bank is serving as financial advisor and capital markets advisor to Arqit and as a placement agent on the PIPE offering.
  • J.P. Morgan is serving as financial advisor to Centricus in connection with the business combination and as a placement agent on the PIPE offering.
  • White & Case LLP is serving as legal advisor to Arqit Limited.
  • Latham & Watkins LLP is serving as legal advisor to Centricus Acquisition Corp.
  • Sidley Austin LLP is serving as legal advisor to the placement agents.

MANAGEMENT & BOARD

Executive Officers

Garth Ritchie, 52
Chief Executive Officer and Director

Mr. Ritchie has over 25 years of experience in banking and finance where he has held a number of senior leadership positions. In 1996, Mr. Ritchie joined Deutsche Bank in the Johannesburg office and went on to become a member of the Global Markets Executive Committee in 2009 as Head of Equities. In January 2016, Mr. Ritchie was appointed to Deutsche Bank’s Management Board with responsibility for Deutsche Bank’s markets division. In 2017, he became Co-Head of the newly created Corporate & Investment Bank. In 2018, he became its sole Head and was appointed as President. In June 2020, Mr. Ritchie joined Centricus, a London-based global investment firm, where he leads the firm’s capital markets and advisory business. Mr. Ritchie earned his B.A. in Finance and Economics from the University of Port Elizabeth.

Cristina Levis, 39
Chief Financial Officer, Chief Investment Officer and Secretary

Ms. Levis started her career at a financial services firm in Switzerland before joining the securitisation team of Banca Finint in Italy, where she went on to manage the structured finance practice of Banca Finint in Luxembourg. In 2011, Ms. Levis joined Silversea Cruises as Chief Business Development Officer and assumed the role of Managing Director of Silversea Expeditions. In 2019, Ms. Levis was appointed Chief Investment Officer of Monaco-based diversified investment company Heritage Group. Ms. Levis also serves as Vice Chairman of Abercrombie & Kent, Chairman of Bucksense, Inc. and serves on the board of directors of Orbital Solutions Monaco.

Board of Directors

Manfredi Lefebvre d’Ovidio, 67
Chairman of the Board of Directors

Mr. Lefebvre is Chairman of Heritage Group, a diversified conglomerate with interests in the cruise industry, property and financial investments. In 2001, Mr. Lefebvre took control of Silversea Cruises and assumed the role of Executive Chairman from 2001 to 2020. During this period, Mr. Lefebvre transformed Silversea Cruises from a cruise line with three vessels to a market leader covering over 900 destinations worldwide. Further, he expanded the product range of Silversea Cruises by adding an expedition fleet, which quickly became a leader in luxury expedition cruising as well. In 2018, Mr. Lefebvre sold two-thirds equity stake of Silversea Cruises to Royal Caribbean Cruises Ltd. for $1 billion. Heritage Group recently acquired a majority stake in the high-end tour operator Abercrombie & Kent with Mr. Lefebvre also becoming co-Chairman of its board. Mr. Lefebvre serves as the President of the Monaco Chamber of Shipping, Member of Executive Committee of the World Tourism and Travel Council, and has held a number of key roles in Cruise Lines International Association, including European Chairman, Member of the Global Executive Committee, and Chairman from 2007 to 2013. Mr. Lefebvre was honored with the Chevalier de l’Ordre de Saint Charles and Grimaldi by SAS Prince Albert of Monaco.

Nicholas Taylor, 61
Director

Mr. Taylor has been an independent director with Altair Partners Limited, based in Jersey, Channel Islands, since May 2018. Prior to joining Altair, Mr. Taylor served as an independent consultant from July 2017 to April 2018. From October 1994 to June 2017, Mr. Taylor was at Ashburton Investments International Holdings Limited, the FirstRand Group’s offshore businesses, which included investment management, trust services and fund administration, where Mr. Taylor was initially Finance Director and then later became Chief Financial Officer and Chief Operating Officer. Mr. Taylor has multi-jurisdictional experience, including board appointments in Jersey, Guernsey, Isle of Man, Luxembourg and Mauritius. Mr. Taylor has also served on a number of audit committees and is currently the chair of the audit committee for a private Jersey based investment management business. Mr. Taylor is a Fellow of the Institute of Chartered Accountants in England and Wales and gained a BSc (Hons) in Electrical and Electronic Engineering from the University of Portsmouth in 1981.

Adam A. Aron [Appointed 5/7/21]
Director

Mr. Aron has served since January of 2016 as Chief Executive Officer, President and a Director of AMC Entertainment Holdings, Inc. AMC is the world’s largest movie theatre company. From February 2015 to December 2015, Mr. Aron was Chief Executive Officer of Starwood Hotels and Resorts Worldwide, Inc. and served on its Board of Directors from 2006 to 2015. From 2006 to 2015, Mr. Aron served as Senior Operating Partner of Apollo Management L.P., a leading private equity firm. Since 2006, Mr. Aron also has served as Chairman and Chief Executive Officer of World Leisure Partners, Inc., a personal consultancy that he founded for matters related to travel and tourism, high-end real estate development, and professional sports. Mr. Aron served as Chief Executive Officer and Co-Owner of the National Basketball Association’s Philadelphia 76ers from 2011 to 2013, and continues as an investor in the team. From 1996-2006, he was Chairman and CEO of Vail Resorts, and from 1993-1996 he was President and CEO of Norwegian Cruise Line. From 1990-1993, he was the chief marketing officer of United Airlines and from 1987-1990 the chief marketing officer of Hyatt Hotels & Resorts. Mr. Aron currently serves on the board of directors of AMC Entertainment and Norwegian Cruise Line Holdings, Ltd. Mr. Aron received a Master’s of Business Administration degree with distinction from the Harvard Business School and a Bachelor of Arts degree cum laude from Harvard College.

ByKristi Marvin