IFA consolidator AFH Financial has called an early general meeting of shareholders to approve plans to raise a further £125,000 to a fund acquisitions through the issue of new ordinary shares in time to allow investors to claim tax relief before the end of the financial year.
The Bromsgrove-based firm, which is listed on the ISDX small-cap exchange that was formerly known as Plus-SX, said it was calling a meeting to be held on 31 March, almost a month earlier than the anticipated date of the annual general meeting on 28 April.
At the meeting it will seek approval to issue 1.25m new ordinary shares of 10p each in the company, which be added to the existing war chest and be used to fund further adviser firm purchases.
If granted, this would enable the firm to capitalise on investor “demand” to issue new shares prior to the end of the tax year on 4 April that would qualify for Enterprise Investment Scheme relief, thus providing subscribing shareholders with 30 per cent income tax relief in the current year.
John Wheatley, chairman of AFH, said to fund acquisitions and the general development of AFH’s business the company has raised about £3.3m since the 2013 annual general meeting. Of this, £750,000 was raised through the issue of unsecured bonds and £2.55m through new shares.
Mr Wheatley added that the company, which has completed seven acquisitions since the implementation of the Retail Distribution Review in January 2013 and 20 overall since listing in June 2011.
Most recently in January, AFH bought the assets of Stoke-based independent advisory firm SR Wealth Management in a deal worth around £200,000.
Mr Wheatley said: “Since the RDR was implemented in January 2013, AFH has been particularly active in exploiting the opportunities and has successfully completed seven acquisitions.
“The company is aware of demand from investors which will provide AFH with additional capital to finance its ongoing acquisition programme.
“A significant proportion of this demand is dependent on the new ordinary shares being issued before 4 April 2014, so that such new ordinary shares would qualify for Enterprise Investment Scheme relief in the current tax year.
“Therefore, rather than waiting until the company’s next annual general meeting... to renew the company’s authorities to issue shares, the directors are convening the general meeting, at which approval will be sought to authorise the directors to allot ordinary shares for cash.”
If exisiting shareholders back AFH’s plans to issue more shares, Mr Wheatley said the IFA consolidator would be able “to pursue its targeted acquisition opportunities effectively, in a competitive and time critical environment.”
In today’s announcement, Mr Wheatley also confirmed AFH still plans to seek admission to Aim later this year.
Enterprise Investment Scheme relief is offered on investments into small businesses with less than 250 staff and with total capital of less than £15m. To find out more, see our comprehensive Guide to Enterprise Investment Schemes.