Tavistock Investments PLC (LON:TAVI) has gone cap in hand to its investors as it looks to raise some money to fund its proposed acquisition of financial advisory firm Price Bailey Financial Services Limited.
The group will look to raise up to £2.1mln through the placing of up to 70mln shares at or around 3p each – a slight discount on this morning’s open.
The placing will only be open to existing shareholders, with several directors and significant shareholders already indicating their intention to participation, Tavistock said.
As for the business that the funds will be used to buy, PBFS is the financial advisory arm of Price Bailey LLP, which it will continue to office-share with post-acquisition.
The total cost will be a maximum of £3.6mln, with £2mln to be paid in cash and the remaining paid through the issue of around 21.3mln shares at the deemed price of 4.4678p.
A fixed second payment of £150,000 on the first anniversary of completion and a variable further payment of up £500,000 on the second anniversary are also due.
Another final payment of up to £440,000 – paid in cash or shares – will also be made on the third anniversary of the acquisition, although this is subject to certain share price requirements, Tavistock added.
“The acquisition of this multi award winning business will enhance the group's profile and will provide a platform from which to launch the group's investment management services to higher net worth clients,” the company told investors.
“The group will also benefit from a significant enhancement to its earnings as a consequence of PBFS' profitable trading and the additional funds under management being introduced to the group.”
PBFS currently employs eight advisors and fourteen support staff and brings with it approximately £313mln or new funds under advice, including £166mln of funds being managed on a discretionary basis.
In the year to March, PBFS reported underlying earnings of £391,000 on turnover of £2.1mln.
Elsewhere, Tavistock said that its businesses were trading profitably and anticipates continued growth in underlying earnings through to the end of its financial year in March.