Listed financial planning firm AFH has received applications from investors for approximately £1.9m of unsecured loan notes and there are indications of further applications to be received through self-invested personal pensions in January.
At the start of the month the firm launched a fundraising initiative by issuing a fresh round of up to £3m unsecured loan notes.
The directors have agreed to exercise their discretion to accept applications up until 31 January 2015 to allow Sipp investors to participate.
The notes pay a coupon of 7.5 per cent. per annum and have a redemption date of 12 December 2018. For every £1,000 of notes subscribed for, the noteholder will receive warrants to subscribe, on redemption of the notes, for 200 new ordinary shares in the company at a price of £2.00 per new ordinary share.
As a result of the applications received, the company will issue warrants to the noteholders to subscribe for 375,000 new ordinary shares.
The notes and the warrants are expected to be issued by 19 December, following receipt of cleared funds from the noteholders.
The proceeds will be used by AFH for general corporate purposes, in particular in pursuit of its stated strategy of continuing to grow its business through strategic acquisitions outside of its traditional core geographical locations.
Alan Hudson, the firm’s chief executive, said that the funds will be used to accelerate AFH’s stated strategy of acquisitive growth.
“Selective acquisitions include both small and medium sized IFA businesses that are located outside of AFH’s traditional core geographical locations and seeking the benefits of being part of larger organisation.
“With increasing funds under management AFH remains well-placed on becoming a leading UK financial planning-led wealth manager.”
Mr Hudson added that the ability to issue the notes facilitates the board’s ability to enhance earnings attributable to shareholders from future acquisitions, whilst maintaining gearing, “all of which is unsecured, at a conservative level”.
Last month, the consolidator said it plans to expand its national presence next year by acquiring firms in London and the south east.
At the time the board said that during recent months it had spotted an increase in the size and rate of IFA companies becoming available for purchase, and expects this trend to continue throughout next year.
Since AFH’s admission to Aim in June, the number and size of potential acquisition targets has grown, the wealth manager’s board stated.
It has completed seven acquisitions, financed by positive trading cash-flow, over the last 12 months and funds under management exceeded £900m in November.
peter.walker@ft.com
