CompaniesDec 9 2015

AFH raises £6.5m to back IFA acquisitions

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AFH raises £6.5m to back IFA acquisitions

The board of listed advisory firm AFH Financial has conditionally raised up to £6.5m to help fund further acquisitions.

In a stock exchange announcement this morning (9 December), the firm detailed it raised £4.5m with institutional and other investors by placing 2,727,273 new ordinary shares and intends to raise up to £2m more from the issue of up to 1,212,121 subscription shares to existing and new investors at the price of £1.65 a share.

Allenby Capital is acting as sole broker in connection with the placing.

It is proposed that the net proceeds of the fundraising will be applied to the purchase of further IFAs and the working capital requirements of the enlarged organisation.

The statement added that AFH has a portfolio of acquisition opportunities which the board are keen to take advantage of during the first six months of 2016.

Chief executive Alan Hudson welcomed the new shareholders on board, including the River and Mercantile UK Micro Cap Investment Company and Octopus Investments.

He said: “We believe our shareholders will see the benefits of our growth strategy in the years to come.”

A shareholder circular explained that during the last 12 months the firm has enjoyed “strong organic growth” with a significant increase in its recurring fee income with total revenues for the full year expected to exceed £20m, over a 30 per cent increase year-on-year.

AFH has increased its national footprint by completing 11 acquisitions at an average capped consideration of about £1m.

The acquisition model is based on a capped earn out over a two-year period with the initial consideration set at up to 50 per cent of the anticipated total value.

During 2015, it used a combination of shares and cash to finance larger acquisitions.

As at 31 October, AFH had cash balances of in excess of £3m and remains fully funded to satisfy the deferred consideration liabilities of announced acquisitions as they fall due.