Flow Group powers up with major fundraising deal
FLOW Group, the Cheshire company which has pioneered an environmentally-friendly micro combined heat and power boiler for domestic use, has announced a major fundraising and manufacturing deal.
It is to raise nearly £18m through a placing and open offer to fund continuing commercial development of its Flow boiler for volume launch from H2 2014.
Its deal with $18bn revenue US company Jabil Circuit – which manufactures for the likes of Apple and Hewlett Packard – will see it produce up to 390,000 Flow boilers at its facility in Scotland.
Capenhurst-based Flow Group, previously known as Energetix, is listed on AIM. Its Flow boiler is a gas-fired domestic boiler that generates electricity at the same time as it uses gas to heat a home, at less than 36% of the cost of electricity from the grid.
Chief executive Tony Stiff said: “”We have been impressed with Jabil’s proposition and partnership approach. Their thorough due diligence and significant investment, via this agreement, in our business illustrates their confidence in our technology and our business plan.
“This is matched by our confidence that Jabil can help us achieve our target of building one of the UK’s largest energy services companies – and then exporting that success into international markets.
“We believe this is one of the most important steps we have yet taken and, as a company, we would like to express our deep satisfaction at the conclusion of this agreement.
“We are also delighted with the support shown by both our existing institutional shareholders and a number of new investors in relation to the oversubscribed fundraising. The very strong demand and the success of the fundraising will enable the company to carry out its business plan with plenty of headroom.”
The company’s fundraising comprises: a firm placing and subscription of 96.3 million new shares at 16.25p each to raise £15,650,125 before expenses by means of a placing with new and existing institutional investors and a director; a subscription of 1.2 million new shares at 16.25p each to raise £205,000 by directors and some senior management and an open offer raising up to £1,96m.
Flow Group’s business model allows customers to receive a Flow boiler at no cost up-front except for installation.
In return, the customer agrees to receive their gas and electricity supply from Flow for five years. Although the customer pays for all the gas and electricity they use in these five years at the normal tariff rate, some of this electricity is being generated by the Flow boiler and is therefore not being bought by the group.
The saving to the group plus the Feed in Tariff payments that the generated electricity attracts for the first 30,000 installations, allows the cost of the boiler to be repaid.
Phil Barry and Julie Finnemore at Atticus Legal advised Flowgroup and Ian Gillis and David Mkhitarian at Hill Dickinson advised Cenkos Securities in relation to the placing and open offer.
