1st Nov 2013 12:40
LONDON (Alliance News) - City of London Group PLC Friday said it is in talks with new investors, who could end up controlling approximately 50.1% in the company.
The company also issued a profit warning, stating that meeting the market's profit expectations for the financial year is "unlikely".
The investment company said Paul Iliescu, a high net worth German citizen and Bruce Mee, founder and Chief Executive of LibraAM AG, a Zug based financial investor, have made it clear that they would retain the company's listing if a deal does go through.
City of London said the discussions, which are at an advanced stage, would involve a GBP10 million share placing that would give the new investors a majority stake.
"The new investors anticipate being able to offer material support to the group's platforms, reduce the overall group equity investment requirement, bring significant platform financing advantages, new business and, over time, promote the development of additional new platforms," City of London said in a statement.
The discussions with new investors came after the company said it needs to raise approximately GBP17 million of capital in the coming months in order to meet its capital requirements and to fulfil the commercial potential of its operating platforms.
It said it was considering a significant equity issue, third party investment directly into its operating platforms, or other proposals that may arise.
"Over the last twelve months the group has utilised the sale proceeds from FX Capital, funds raised from a small equity issue and the continued sale of its listed equity investment portfolio, to support its businesses. Whilst the group has sufficient resources for its present requirements and is able to take further measures to improve its available resources, the board considers that it should now seek to raise up to an additional GBP2 million to ensure it has sufficient financing flexibility to meet its other current and potential needs for the medium term," the company said in a statement.
The company said there are possibilities for profitability in its Credit Asset Management Limited platform.
Therium Capital Management Ltd is in advanced discussions with a US partner to form a new international joint venture fund, which would require GBP4 million in equity capital from the group and would make Therium a 50% owner. If the deal goes through, City of London Group said Therium's share of the joint venture profits would be expected to bring it to immediate profitability.
It said Trade Finance Partners Ltd is experiencing good growth, but would also require GBP3-5 million in additional capital to satisfy demand for its trade finance facilities.
City of London Group shares were Friday quoted at 58.00 pence, down 3.3%.
By Samuel Agini; [email protected]; @samuelagini
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