AFH urges shareholder approval to fund £6.5m war chest

WORCESTERSHIRE IFA AFH has finalised terms on a new shareplacing which could provide the company with a £6.5m war chest to fund future acquisitions.

The Bromsgrove-based group has called a general meeting for later this month seeking shareholder approval for the placing of 2,727,273 new ordinary shares (worth £4.5m) and a subscription of up to 1,212,121 new ordinary shares at a placing price of 165p each (total value £2m). Allenby Capital is acting as sole broker to the company in connection with the placing.
 
The placing price represents a discount of approximately 12.70% on the closing mid-market price on AIM of 189p per share on December 8.

AFH told the London Stock Market the net proceeds of the fundraising would be used by the company to fund acquisitions and for the working capital requirements of the enlarged organisation.

The company said it had a hitlist of potential acquisitions and it was keen to progress the purchase strategy during the first half of next year.

Alan Hudson, CEO, AFH said: “We are delighted to raise additional funding of up to £6.50m 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.”

Commenting, Mark Thomas, analyst at Edison Investment Research, said: “The fundraising was expected but the size is a little bigger than we had forecast – its current market cap is £38m, the placing is up to £6.5m – we had expected up to 10%. The strategy is to raise funds before they are spent and management previously indicated lots of opportunities out there. Historically it has been prudent in the size, nature and financing of acquisitions, a trend we expect to continue.”

The company will use a general meeting in London on December 23 to push the case for the fundraising.

The board has already recommended shareholders to approve the move as directors believe it is in the best interests of the group going forward.

Should the shareholders give their backing then it is expected the new shares will be admitted for trading on AIM on December 30.