TIDMBEG
RNS Number : 5226T
Begbies Traynor Group PLC
25 July 2022
25 July 2022
Begbies Traynor Group plc
Acquisition
Begbies Traynor Group plc (the "group") today announces the
acquisition of Axiom Consulting & Investments Limited and
Ellayaan Limited and their subsidiary undertakings, which together
trade as Mantra Capital ("Mantra"), a London-based property finance
brokerage.
Highlights of the acquisition
-- Initial consideration of GBP4.5m comprised of GBP4.0m in cash
from the group's existing facilities and the issue of 352,361 new
ordinary shares
-- Potential earn out of up to an additional GBP13.5m (in a mix
of cash and shares) subject to delivering material growth in
profits over the four years post completion
-- Mantra to join with MAF Finance Group (acquired May 2021) to
form a national finance brokerage with complementary sector
expertise
-- In line with our strategy to increase the scale, quality and
range of the group's services both organically and through
value-accretive acquisitions
-- Expected to be immediately earnings enhancing
About Mantra
Mantra is an FCA-regulated finance and insurance brokerage based
in London. The team has significant expertise across both
commercial and residential real estate lending, providing property
investment and development finance, finance for trading businesses
and residential mortgages. In addition, they provide insurance
brokerage services to their commercial clients.
The team of 23 employees, including two directors, joining the
group have extensive banking experience and will enhance our
financial advisory services. The business has a strong relationship
with a large panel of banks and specialist funders and raised
finance in excess of GBP500m for its clients over the last
year.
In its financial year ended 31 December 2021, Mantra (on a
combined basis) achieved revenue of GBP4.2m and normalised pre-tax
profits of GBP1.2m (when reported on the same basis as the group).
It had net assets of GBP2.6m (including cash of GBP1.3m) as at 31
December 2021.
Reasons for and benefits of the acquisition
The group's strategy is to increase the scale and quality of its
businesses both organically and through value-accretive
acquisitions to both complement and diversify its range of service
offerings.
In May 2021, we acquired the MAF Finance Group, a
well-established finance brokerage, which has performed strongly in
its first twelve months within the group. Finance broking
complements the group's other advisory and transactional services,
particularly debt advisory and restructuring, as well as the
valuation and sale of assets.
Mantra together with MAF Finance Group will form BTG Funding
Solutions, a finance brokerage with expertise across a wide range
of sectors, including real estate, construction, engineering and
manufacturing, haulage, healthcare, agriculture, renewables and
vehicles. The combined team of 70 employees with an enhanced
national coverage, generated annual fee income of c.GBP8m and
arranged finance in excess of GBP800m for clients over the last
twelve months.
The combined BTG Funding Solutions team will aim to continue its
strong record of growth through the recruitment of experienced
employees. It will market its services directly to the corporate
community and also through the group's existing, extensive referral
network of accountants and other professionals, in addition to
supporting the group's client assignments.
The acquisition is expected to be immediately earnings enhancing
and will be reported as a part of the business recovery and
financial advisory division.
Principal terms of the acquisition
The acquisition is for a maximum potential consideration of
GBP18.0m on a cash free and debt free basis with an agreed level of
working capital. The consideration is structured as follows:
-- Initial consideration of GBP4.5m (subject to any cash
free/debt free and working capital adjustments), to be satisfied as
GBP4m in cash financed through the group's existing facilities and
through the issue of 352,361 new ordinary shares of 5 pence each in
the group ("New Ordinary Shares").
-- Maximum earn out of up to GBP13.5m (at least 67% is payable
in cash with the balance in New Ordinary Shares at the discretion
of the group) subject to delivering material growth in profits as
detailed below:
o GBP5.5m subject to average PBT of GBP2.0m in years 1 and 2
o GBP8.0m subject to average PBT of GBP4.0m in years 3 and
4.
The initial cash consideration will be funded through the
group's existing financial resources, which comprised net cash of
GBP4.7m as at the year ended 30 April 2022 and significant
committed bank facilities. The group has received FCA approval for
the change of control.
Admission and total voting rights
Application has been made to the London Stock Exchange plc for
the 352,361 New Ordinary Shares to be admitted to trading on AIM
("Admission"). Admission of the New Ordinary Shares, which will
rank pari passu in all respects with the group's existing shares in
issue, is expected to become effective on 28 July 2022.
Following Admission, the total number of shares in issue and
total voting rights will be 154,141,110. The group does not hold
any shares in treasury and, therefore, the above figure may be used
by shareholders as the denominator for the calculation by which
they will determine if they are required to notify their interest
in, or a change to their interest in the company.
Ric Traynor, Executive Chairman of Begbies Traynor Group plc,
commented:
"The acquisition of Mantra is in line with our growth strategy
to complement and expand our services and regional coverage, whilst
enabling us to form a national finance business serving a wide
range of sectors.
"We believe access to finance will be critical as the economy
addresses its current challenges. BTG Funding Solutions will be a
major addition to the support and advice we can provide, whilst
enhancing our long-term organic growth prospects."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) No 596/2014.
The person responsible for arranging the release of this
announcement on behalf of Begbies Traynor Group plc is Nick Taylor,
its Group Finance Director.
Enquiries please contact:
Begbies Traynor Group plc 0161 837 1700
Ric Traynor - Executive Chairman
Nick Taylor - Group Finance Director
Canaccord Genuity Limited 020 7523 8350
(Nominated Adviser and Joint Broker)
Adam James / Patrick Dolaghan
Shore Capital 020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James
Thomas
MHP Communications 020 3128 8567
Reg Hoare / Katie Hunt / Pauline Guenot begbies@mhpc.com
Information on Begbies Traynor Group can be accessed via the
Group's website at
www.begbies-traynorgroup.com/investor-relations
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END
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