AFH Financial seeks emergency consent for share issue to exploit growth potential
WORCESTERSHIRE IFA, AFH Financial, has proposed new steps to help it roll-out its fundraising strategy to take advantage of consolidation in its industry.
The Bromsgrove company is set to stage a general meeting later this month where shareholders will be asked to approve plans to issue 1,250,000 new shares at 10p each.
The board is also recommending shareholders approve a special resolution empowering directors to disapply shareholders’ statutory pre-emption rights allowing them to issue ordinary shares of 10p each up to an aggregate value of £125,000.
The firm, which has been aggressively growing its portfolio of business through acquisitions, last month announced its intention to move up to the Alternative Investment Market (AIM). It said this was still the case and this was likely to occur later in the year.
In a note to shareholders regarding the general meeting, the firm said the impact of the Retail Distribution Review was continuing to drive consolidation within the IFA industry and since the RDR was implemented in January 2013, AFH had been active in exploiting the opportunities, successfully completing seven acquisitions.
To fund these acquisitions and the general development of AFH’s business, the company has raised approximately £3.3m since its 2013 AGM. Of this amount, £0.75m was raised through the issue of 8% Unsecured Bonds due 2020 and £2.55m through the issue of a total of 2,334,134 new ordinary shares.
The new shares were issued after granting directors permission at the 2013 AGM to issue new ordinary shares for cash on a non pre-emptive basis. However, as a consequence the company now does not have sufficient authority to issue such shares to investors.
The company said it was aware of demand from investors which would provide the business with additional capital in order to finance its ongoing acquisition programme.
However, it said a significant proportion of this demand was dependent on the new shares being issued before April 4, 2014, so that they could qualify for Enterprise Investment Scheme relief in the current tax year.
Therefore, rather than waiting until the company’s next annual general meeting, scheduled for the end of April, AFH has opted to stage the general meeting so it can issue the shares as quickly as possible.
John Wheatley, AFH chairman said: “The directors consider that the resolutions are in the best interests of the company and will promote the success of the company for the benefit of its shareholders as a whole.”
The meeting will take place at AFH House, Stoke Heath, Bromsgrove on March 31.
