TIDMAFHP
RNS Number : 4356I
AFH Financial Group Plc
09 December 2015
9 December 2015
AFH FINANCIAL GROUP PLC
("AFH" or the "Company")
Proposed fundraising to raise up to GBP6.50 million
and
Notice of General Meeting
The Board of AFH, a leading financial planning led investment
management firm, is pleased to announce that it has conditionally
raised up to GBP6.50 million (before expenses) by way of a Placing
of 2,727,273 new Ordinary Shares and a Subscription of up to
1,212,121 new Ordinary Shares (together the "Fundraising") at a
Placing Price of 165 pence per new Ordinary Share. Allenby Capital
Limited is acting as sole broker to the Company in connection with
the Placing.
Under the Placing, the Company has conditionally raised GBP4.50
million (before expenses) through a placing of 2,727,273 Placing
Shares at 165 pence per share with institutional and other
investors. Under the Subscription, the Company intends to raise up
to GBP2.00 million (before expenses) from the issue of up to
1,212,121 Subscription Shares to existing and new investors in the
Company at the price of 165 pence per Subscription Share. The
Placing Price represents a discount of approximately 12.70 per
cent. to the closing mid-market price on AIM of 189 pence per
Existing Ordinary Share on 8 December 2015, being the last dealing
day prior to the publication of this announcement.
It is proposed that the net proceeds of the Fundraising will be
applied by the Company to fund the purchase of further IFA
companies and the working capital requirements of the enlarged
organisation. The Company has a portfolio of acquisition
opportunities which the Board are keen to take advantage of during
the first six months of 2016.
The Placing is conditional, inter alia, upon the Company
obtaining approval from Shareholders to grant authority to the
Board to allot the Placing Shares and to disapply pre-emption
rights which would otherwise apply to the allotment of the Placing
Shares. The Placing is conditional upon Admission, which is
expected to take place on or around 30 December 2015.
Alan Hudson, Chief Executive Officer of the Company, said: "We
are delighted to raise additional funding of up to GBP6.50 million
from both existing shareholders and new investors to enable AFH to
continue to execute upon its growth strategy. We look forward to
welcoming our new shareholders on board, including the River and
Mercantile UK Micro Cap Investment Company and Octopus Investments,
and we would like thank our existing shareholders for their
continued support. We believe our shareholders will see the
benefits of our growth strategy in the years to come."
Copies of the circular, which were posted to shareholders
yesterday evening, 8 December 2015, will shortly be available on
the Company's website (www.afhfinancialgroup.com). Edited extracts
from the circular are detailed below. The same definitions apply
throughout this announcement as are applied in the circular. The
circular contains a notice convening a General Meeting to be held
at 11.00 a.m. on 23 December 2015 at AFH House, Buntsford Drive,
Stoke Heath, Bromsgrove, B60 4JE, at which the Directors will seek
Shareholder approval for the Placing.
Enquiries:
AFH Financial Group PLC 01527 577 775
Alan Hudson, Chief Executive Officer
Paul Wright, Chief Financial Officer
www.afhfinancialgroup.com
Allenby Capital Limited 020 3328 5656
(Nominated Adviser and Broker)
Nick Naylor
Chris Crawford
Nick Athanas
Yellow Jersey PR Limited 07768 537 739
Dominic Barretto
Aidan Stanley
1. Introduction
The Board of AFH is pleased to announce a proposed placing of
2,727,273 new Ordinary Shares at the Placing Price to raise GBP4.50
million (before expenses) from institutional and other investors
together with a proposed subscription of up to 1,212,121 new
Ordinary Shares at the Placing Price to raise approximately GBP2.00
million (before expenses). The gross proceeds of the Fundraising
are up to GBP6.50 million. The net proceeds of the Fundraising will
be used to fund the continued growth of the Company and in
particular to provide funding for the Company's pipeline of
prospective IFA acquisitions. The Placing has been arranged by
Allenby Capital. The Fundraising is not being underwritten.
The Board has called a General Meeting to consider the
Resolutions, which would give the Board sufficient authority to
issue the Placing Shares. The issue of the Subscription Shares will
be undertaken from the Company's existing share authorities that
were put in place at the annual general meeting of the Company,
held on 23 April 2015. The Company intends to procure Subscribers
for the Subscription Shares prior to the date of the General
Meeting.
The purpose of this circular is, amongst other things, to:
(i) set out the reasons for, and details of, the Fundraising;
(ii) explain why the Board considers that the Fundraising will
promote the success of the Company for the benefit of Shareholders
as a whole; and
(iii) seek Shareholder approval of the Resolutions.
This circular also contains the Directors' recommendation that
Shareholders vote in favour of the Resolutions. Notice of the
General Meeting at which the Resolutions will be proposed is set
out at the end of this circular. A Form of Proxy is enclosed with
this circular.
The Placing is conditional, amongst other things, upon
Shareholders passing the Resolutions at the General Meeting. The
Directors intend to vote in favour of the Resolutions in respect of
their own beneficial holdings in the Company which amount, in
aggregate, to 7,852,725 Ordinary Shares and represent approximately
38.93 per cent. of the Company's Existing Ordinary Shares.
The Directors believe that the Fundraising is the most
appropriate way to raise additional funds for AFH. The Directors
consider that the Fundraising provides greater certainty than other
available means of raising additional funds in a timely fashion and
minimises transactional costs.
2. Background to and reasons for the Fundraising
On 9 November 2015, the Company announced a trading update.
During the last 12 months the Company has enjoyed strong organic
growth with a significant increase in its recurring fee income with
total revenues for the full year expected to exceed GBP20 million,
over a 30 per cent. increase year on year. In addition AFH has
increased its national footprint by completing 11 acquisitions at
an average capped consideration of approximately GBP1 million. The
acquisition model is based on a capped earn out over a two year
period with the initial consideration set at up to 50 per cent. of
the anticipated total value. During 2015, the Company used a
combination of shares and cash to finance its larger acquisitions.
As at 31 October 2015, the Company had cash balances of in excess
of GBP3 million and remains fully funded to satisfy the deferred
consideration liabilities of announced acquisitions as they fall
due.
On 9 November 2015, the Company also announced it was
considering additional financing options, including further share
issues, to take advantage of the pipeline of acquisition
opportunities. As previously announced there has been a continued
increase in the size and rate of IFA companies becoming available
for purchase and the Board believes the net proceeds from the
Fundraise will provide the Company with a strong platform to
finance new IFA acquisitions as well as providing funds for the
working capital requirements of the enlarged organisation.
3. Details of the Fundraising and use of proceeds
The Fundraising is expected to raise a total of GBP6.50 million
before expenses (assuming that the Subscription is
fully-subscribed). The net proceeds of the Fundraising (being
approximately GBP6.29 million after the costs associated with the
Fundraising) will be applied by the Company to fund the purchase of
further IFA companies and the working capital requirements of the
enlarged organisation. The Company has a portfolio of acquisition
opportunities which the Board are keen to take advantage of during
the first six months of 2016.
Under the Placing, the Company has conditionally raised GBP4.50
million (before expenses) through a placing of 2,727,273 Placing
Shares at 165 pence per share with institutional and other
investors. The Placing has been arranged by Allenby Capital. The
Company has entered into a Placing Agreement under which Allenby
Capital has agreed to use its reasonable endeavours to procure
Placees for the Placing Shares at the Placing Price. The Placing
has not been underwritten. Under the Subscription, the Company
intends to raise up to GBP2.00 million (before expenses) from the
issue of up to 1,212,121 Subscription Shares to existing and new
investors in the Company at a price of 165 pence per Subscription
Share. The Company intends to procure Subscribers for the
Subscription Shares prior to the date of the General Meeting.
The New Ordinary Shares will represent approximately 16.34 per
cent. of the Enlarged Share Capital (assuming that GBP2.00 million
is raised pursuant to the Subscription and no Options are exercised
prior to Admission). The Placing Price represents a discount of
approximately 12.70 per cent. to the closing mid-market price on
AIM of 189 pence per Existing Ordinary Share on 7 December 2015,
being the last dealing day prior to publication of this
circular.
(MORE TO FOLLOW) Dow Jones Newswires
December 09, 2015 02:00 ET (07:00 GMT)
The Placing Agreement contains, inter alia, customary
undertakings and warranties given by the Company in favour of
Allenby Capital as to the accuracy of information contained in this
circular and other matters relating to the Company. Allenby Capital
may terminate the Placing Agreement in specified circumstances
prior to Admission, including, inter alia, for material breach of
the Placing Agreement or any other warranties contained in it and
in the event of force majeure.
The Placing Agreement is conditional, inter alia, upon:
a) the passing of the Resolutions; and
b) Admission occurring by not later than 8.00 a.m. on 30
December 2015 (or such later time and/or date as the Company and
Allenby may agree, not being later than 8.00 a.m. on 29 January
2016).
If any of the above conditions are not satisfied or, if
applicable, waived, the Placing will not proceed.
The New Ordinary Shares will be issued credited as fully paid
and will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive dividends and other
distributions declared on or after the date on which they are
issued.
It is expected that CREST accounts will be credited on the day
of Admission and that share certificates (where applicable) will be
despatched within 5 working days of Admission.
4. Significant Shareholders
The issue of the New Ordinary Shares (assuming that the
Subscription is fully subscribed) will result in the following
changes to the shareholding interests of the Company's existing
Significant Shareholders and Directors:
At the date On Admission
of this Circular
-------------------------- --------------------------
Significant Shareholder Number Percentage Number Percentage
or Director of Ordinary of Issued of Ordinary of Issued
Shares Share Shares Share
held Capital held** Capital**
Alan Hudson (Chief
Executive Officer) 7,555,700 37.46 7,555,700 31.34
Philip Mobberley* 2,967,919 14.71 2,967,919 12.31
Paul Connor 2,000,000 9.91 2,000,000 8.29
John Wheatley (Non-Executive
Chairman) 227,121 1.13 227,121 0.94
Paul Wright (Finance
Director) 35,000 0.17 35,000 0.15
Mark Chambers (Non-Executive
Director) 19,904 0.10 19,904 0.08
Austin Broad (Executive
Director) 15,000 0.07 15,000 0.06
*Includes 816,347 Ordinary Shares held by Lynne Karen Mobberley
(Philip Mobberley's wife) and 489,041 Ordinary Shares held by P
Mobberley Carpenters Limited (a company whose voting rights are 50
per cent. held by Philip Mobberley and 50 per cent. held by Lynne
Karen Mobberley).
** Assumes the maximum of GBP2,000,000 is raised pursuant to the
Subscription and no participation in the Subscription from the
Significant Shareholders or Directors.
5. Application for Admission to AIM
Application will be made to the London Stock Exchange for the
Placing Shares and Subscription Shares to be admitted to trading on
AIM. It is expected that Admission will become effective and that
dealings in the New Ordinary Shares will commence at 8.00 a.m. on
30 December 2015.
6. General Meeting
A notice convening the General Meeting to be held at AFH House,
Buntsford Drive, Stoke Heath, Bromsgrove, B60 4JE at 11.00 a.m. on
23 December 2015 is set out at the end of this circular. At the
General Meeting shareholders will consider the Resolutions which,
among other things, grant the Directors authority to allot the
Placing Shares and disapply statutory pre-emption rights in
relation to such allotments.
At the General Meeting, the following resolutions will be
proposed:
1. an ordinary resolution, to grant authority to the Directors
to allot, pursuant to the Placing, shares in the capital of the
Company up to an aggregate nominal amount of GBP272,727.30. This
authority is in addition to the authorities granted to the
Directors at the Annual General Meeting of the Company held on 23
April 2015, and will expire (along with such authorities) at the
conclusion of the Annual General Meeting of the Company to be held
in 2016; and
2. conditional on the passing of resolution 1 above, a special
resolution to disapply statutory pre-emption rights in respect of
the allotment of the Placing Shares for cash pursuant up to an
aggregate nominal amount of GBP272,727.30. This authority is in
addition to the authorities granted to the Directors at the Annual
General Meeting of the Company held on 23 April 2015, and will
expire (along with such authorities) at the conclusion of the
Annual General Meeting of the Company to be held in 2016.
7. Action to be taken by Shareholders
Shareholders will find accompanying this circular a Form of
Proxy for use at the General Meeting. Whether or not Shareholders
intend to be present at the General Meeting, they are requested to
complete, sign and return the Form of Proxy in accordance with the
instructions printed on it to SLC Registrars, 42-50 Hersham Road,
Walton-on-Thames, Surrey, KT12 1RZ as soon as possible and, in any
event, so as to arrive no later than 11.00 a.m. on 21 December
2015.
Completion and return of the Form of Proxy will not affect
Shareholders' right to attend and vote in person at the General
Meeting if they so wish. Further information regarding the
appointment of proxies can be found on page 13 of this
circular.
8. Recommendation
The Board considers the Fundraising to be in the best interests
of the Company and Shareholders as a whole and therefore the
Directors unanimously recommend that Shareholders vote in favour of
the Resolutions to be proposed at the General Meeting, as they
intend to do in respect of their, in aggregate 7,852,725 Existing
Ordinary Shares (representing approximately 38.93 per cent. of the
Company's Existing Ordinary Shares).
Expected Timetable of Principal Events
Publication of this circular 8 December 2015
Latest time and date for 11.00 a.m. on 21 December
receipt of Form of Proxy 2015
General Meeting 11.00 a.m. on 23 December
2015
Admission effective and 8.00 a.m. on 30 December
dealings in the New Ordinary 2015
Shares expected to commence
on AIM
Date for crediting of 8.00 a.m. on 30 December
New Ordinary Shares in 2015
uncertificated form to
CREST stock accounts
Date of despatch of share by 7 January 2016
certificates in respect
of the New Ordinary Shares
in certificated form
If any of the details contained in the timetable above should
change, the revised times and dates will be notified to
Shareholders by means of an announcement through the Regulatory
Information Service. All references to time and dates in this
circular are to time and dates in London.
Definitions
The following definitions apply throughout this circular, unless
the context requires otherwise:
"2006 Act" the Companies Act 2006 (as amended)
"Admission" the admission to trading on AIM
of the Subscription Shares and
the Placing Shares in accordance
with the AIM Rules for Companies
"AIM" the market of that name operated
by the London Stock Exchange
"AIM Rules the AIM Rules for Companies, as
for Companies" published and amended from time
to time by the London Stock Exchange
"Allenby Capital" Allenby Capital Limited, a company
incorporated in England and Wales
with company number 06706681 and
which is authorised and regulated
by the FCA
"Board" or the directors of the Company from
"Directors" time to time
"Business Day" any day (other than a Saturday
or Sunday) upon which commercial
banks are open for business in
London, UK
"Company" AFH Financial Group plc
or "AFH"
"CREST" the computerised settlement system
(as defined in the CREST Regulations)
operated by Euroclear UK & Ireland
which facilitates the transfer
of title to shares in uncertificated
form
"Enlarged Share the issued ordinary share capital
Capital" of the Company immediately
following Admission (taking into
account the issue of the New
Ordinary Shares)
"Euroclear Euroclear UK & Ireland Limited,
UK & Ireland" the operator of CREST
"Existing Ordinary the 20,172,376 existing Ordinary
Shares" Shares in issue as at the date
of this circular
"FCA" the Financial Conduct Authority
of the United Kingdom
"Form of Proxy" the form of proxy accompanying
this circular
"FSMA" the Financial Services and Markets
Act 2000 (as amended)
"Fundraising" together, the Placing and the Subscription
"General Meeting" the general meeting of Shareholders
to be held at 11.00 a.m. on
(MORE TO FOLLOW) Dow Jones Newswires
December 09, 2015 02:00 ET (07:00 GMT)
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