Two directors and an employee of Tavistock Investments have agreed to pump £210,000 each into the firm to help it comply with regulatory requirements.
A stock exchange announcement released this morning (September 27) revealed that three directors, Oliver Cooke, Brian Raven, and chief investment officer Christopher Peel have agreed to provide an unsecured loan facility of £630,000 to the company.
The stock market announcement stated that the loan is being made available as the company may need it to meet its regulatory capital requirements.
The statement said the company has been acquiring advice firms, and using other surplus capital to repay a loan to Natwest bank and expand its efforts to grow funds under management.
The statement said these efforts, combined with fears that Brexit uncertainty could dent its business model, have led to it arranging the loan facility.
The statement said: “The company's regulatory capital requirement has increased as a result of these initiatives. However, the directors believe that seeking to raise additional capital now would be unduly dilutive for shareholders.
"To bolster the regulatory capital position in a manner that is not dilutive to shareholders, they have entered into an unsecured convertible loan facility with two of the company's directors and its chief investment officer.”
There is a facilitation fee of five per cent of the total, and an interest rate of 10 per cent, all repayable by September 2020. If Tavistock chooses not to draw down the funds by that date, a 3 per cent fee is payable to the directors.
The company has the right to convert the debt into shares in the business.
The statement said the company was trading in line with expectations.
Speaking to FTAdviser in May 2019, chief executive Brian Raven, who is one of those providing the loan, revealed that 30 advisers had left its network over the year to the end of March, and gross revenues from the adviser business fell by 11 per cent.
He highlighted the impact of Mifid regulations as a “burden” on his business.
The company’s funds under management were £945m at the time.
For the year to the end of March 2018, the company made its first ever profit of £221,000.
david.thorpe@ft.com
