Marketing and communications firm Porta Communications (LON:PTA) is backing a takeover of equity research firm Broker Profile by two former luminaries of stockbroker Seymour Pierce.
The company has taken a 29.5% stake in Capital Access Group (CAG), a newly formed company set up by Richard Feigen and Kevin Lapwood, until recently partners at Hub Capital Partners and, respectively, the ex-managing director and ex-head of Research at brokers, Seymour Pierce.
CAG is buying the entire issued share capital of Broker Profile, a corporate communications, investor access and equity research firm that last year made pre-tax profits of £0.8mln on revenues of £2.7mln.
The total consideration paid by Capital Access for the entire issued share capital of Broker Profile is £4mln plus surplus cash over and above an agreed formula to represent normalised working capital.
Porta’s acquisition of the 29.5% stake in Capital Access Group, however, is a non-cash transaction, though Porta will provide CAG with certain office services for the next 42 months and will guarantee a minimum of £2mln of debt.
Porta said the other CAG shareholders have agreed to an arrangement that will offer Porta protection as a minority shareholder; this protection will take the form of a call option that will allow Porta to progressively increase its stake in CAG, should it wish, after the end of 2017.
In effect, Porta will indirectly have a 29.5% stake in Broker Profile through CAG, with the option to take total ownership of CAG at some point in the future.
"We believe the combination of investor access together with investor relations and financial public relations will be valuable services to offer to clients and will broaden Porta Group's service offering to its existing clients," said David Wright, chief executive officer of Porta.
Richard Feigen of Capital Access said: "With the expected changes in the corporate broking regulatory background in Europe and effect of technology on the way investors of all sizes receive information, the need for integrated advice on investor communications has never been greater. The tie-up with Porta will enable us to offer corporate clients a greater range of services than ever before."