DBAY Advisors to take 29% stake in Anexo Group
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Anexo Group, the specialist integrated credit hire and legal services provider, announced a new investor today.
The business, based in Liverpool as well as offices in Bolton and Leeds, said private equity firm DBAY Advisors has agreed to take a 29% stake in the group, purchasing shares from Alan Sellers, Samantha Moss and Valentina Slater at a price of 150p per share.
Alan Sellers, who founded the group in 1996, will continue in his role as executive chairman. Samantha Moss will remain as managing director, Bond Turner, and Valentina Slater will remain as sales director, Direct Accident Management.
DBAY is an international asset management firm with offices in the Isle of Man and London.
It set up its first investment vehicle in 2008 and now manages investments on behalf of institutional investors, family offices, pension funds, trusts and foundations in various funds. It was involved in the rescue of Warringtonm-based logistics group Eddie Stobart.
Anexo said it plans to work closely with DBAY to continue the expansion of its credit hire and legal services divisions and is committed to the creation of value for all its shareholders.
Alan Sellers said: “We are delighted to welcome DBAY as a major shareholder in the group. They have an excellent track record of smaller company investment and we look forward to working closely with them to achieve growth across our various business divisions.”
DBAY partner and chief investment officer, Saki Riffner, said: “We are excited to invest in Anexo alongside Alan, who has built the business over the last 25 years, and we are looking forward to working closely with him and his team to drive the future growth of the group.”
DBAY will initially acquire 9.9% of the issued share capital of the group. Following receipt of the necessary regulatory approvals from the Financial Conduct Authority and the Solicitors’ Regulatory Authority, DBAY will then acquire an additional 19.1% shareholding in the group.
On completion of the second part of the transaction, DBAY will have the right to appoint up to three non-executive directors to the group’s board of directors. At the same time, the group will enter into an agreement with DBAY which restricts any material changes to its existing business model, including acquisitions, disposals and/or debt finance, without the majority consent of DBAY’s representatives on the board.
It is anticipated that Alan Sellers, Samantha Moss and Valentina Slater will give undertakings which preclude any further disposals of their remaining shareholdings for a period of 18 months following completion of the second part of the transaction.
At the end of this period, they will undertake for a further 12 month period not to sell any part of their individual or collective holdings below the price of the transaction.
Nik Lysium, equity research analyst at finnCap, said this morning: “It’s kind of a shame that it takes a PE buyer to demonstrate to public market investors belief in, and therefore an understanding of, this neat, niche model with lots of upside potential.
“Investors have thus far potentially misunderstood the cash generative nature of the company.
“I’m sure the stake will accelerate greater interest and understanding and shares will no doubt perform well as the model grows and develops with new support.”
Anexo also released a current trading update which said its core businesses have continued to be fully operational following the reintroduction of a national lockdown.
Activity levels in the credit hire division continue to be high.
The COVID-19 pandemic has led to a number of the group’s competitors withdrawing from the market and, as a result, Anexo has been approached by a number of high-quality introducer garages looking for new partnerships.
The group said it has taken advantage of this unprecedented opportunity to expand its introducer network. As a consequence the number of vehicles on the road during the second half of 2020 has consistently exceeded internal targets and, as at November 10, stood at 1,902.
Courts remain open, as they have done throughout the year, and the group’s legal services division, Bond Turner, has continued to reach case settlements via telephone and online hearings where necessary.
Despite the COVID-19 pandemic, which has continued to have an impact on cash collections in the second half of 2020, the board expects overall cash collections for fiscal year 2020 to be ahead of the prior year.
The expansion of the introducer network and the corresponding increase in the number of vehicles on the road has led to the expectation that the second half of 2020 will be a period of cash absorption, rather than cash generation.
The Group announced in January that a new regional office in Leeds for Bond Turner would open during 2020. Following delays caused by the COVID-19 lockdown, the group is now pleased to confirm that a lease has been signed and the Leeds office will become operational in the first quarter of fiscla year 2021. Staff have already been recruited and further recruitment will continue.
The board confirms that it expects the second half of 2020 underlying profit before tax to recover strongly from first half levels. It said the group is trading in line with management expectations.