H&T Group PLC (AIM:HAT) launched a £16.9mln equity fundraising to fund further growth in its pledge book and an expansion of the store estate in what it said are “encouraging market conditions”.
Following a record month for the pawnbroking business, the AIM-listed company is looking to raise the money via an institutional placing run by broker Shore Capital and a retail offer on the PrimaryBid platform.
Both will be at an issue price of 425p per share, a discount of 4.3% to the closing price on Wednesday, while the total number of new shares is expected to represent roughly 9.9% of the groups’ total share capital.
The pawnbroker reported a strong rise in profits for the first half of the year and said it still expects to deliver 2022 results in line with market expectations.
Demand has continued to build and the pledge book stood at £86.9mln at the end of last month, with retail sales remaining strong through the summer and gold purchasing buoyant, with the high gold price continuing to support scrap margins.
Management believes the strong pawnbroking demand is a consequence of two main factors that are not expected to abate in the short to medium term: the squeeze on disposable incomes as a consequence of rising inflation and a reduction in the number of lenders offering small-sum short-term credit.
The return of overseas travel, particularly over the summer, continues to drive growth in its forex business, with revenues maintained at double the levels of 2021.
H&T is seeking to use the funds to expand its geographical coverage with 20 new store openings in 2023, saying a targeted store presence is essential for developing the profile within the communities it serves.
“Pawnbroking is a relationship based product. Stores also support online retail fulfilment and other product offerings. Currently the company has regional gaps in its store coverage, including Wales and the West, the North West, Lincolnshire and the East. There is also opportunity for further density in London along with other key towns and cities where H&T already has a presence.”