Foster Denovo  

Foster Denovo: going private makes funding easier

Foster Denovo: going private makes funding easier

Foster Denovo’s decision to go from a public company to a private one will make it easier for it to attract private equity investment, a document seen by FTAdviser has said.

The letter, sent to the company’s shareholders and optionholders, said Foster Denovo had drawn up a strategy to receive investment.

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In the letter, the company said: “Our corporate finance advisers have advised that private equity investors will not put themselves in a position where they are required to make an offer to optionholders of the company to buy out their options and so private equity investors are likely to require the re-registration of the company as a condition of providing funding.”

It added: “FDG was originally set up as a public limited company for historic reasons relating to its initial funding in 2007.

“The company has never admitted its shares for trading on any stock exhcnage and the board sees no benefit to the company continuing to remain as a public company, even if we were not seeking investment.”

The letter added that a proposed strategy to receive investment in the company has been set out, but FTAdviser has not seen this.

A spokeswoman for Foster Denovo said: “A general meeting of Foster Denovo Group plc took place in September to consider special resolutions to reregister the company as a private limited company.

“These were proposed in order to facilitate future investment for our growth and acquisition strategy and were duly passed.

“We are not in a position to comment on any potential investments or acquisitions at this time.”

In 2014 and 2015 the number of advisers at Foster Denovo fell from 90 to 73, with the company saying this has hit its revenue and productivity.

Earlier this year, Foster Denovo, part of the Foster Denovo Group, posted a loss before tax of £1.8m for 2015 compared with a £1.3m profit in 2014 which it attributed to the loss of its advisers.

Chief executive Roger Brosch told FTAdviser in March that he had struggled to find quality IFAs to swell the company’s ranks so would be looking to buy firms.

During 2015 Foster Denovo reached a retirement advice referral deal with Friends Life and entered into a referral relationship with professional services group Optionis.

In January the national firm made director of compliance Jane McTigue redundant, but confirmed four new advisers had recently joined.