News blog

XCAP Securities

• BY: Andrew Hore |
• POSTED: 03/10/2012 |

Aim adviser XCAP Securities is acquiring the fund management activities of Hume Capital LLP and its founder will become XCAP’s boss.

The fund management companies, including EPIC Investment Partners, manage more than £250m of assets – taking to the total for the group to more than £290m. The acquisitions can generate annual fees of £2.2m but costs will need to be cut for them to become profitable. Sharing office space will help with this. They also provide corporate advice to the oil and gas sector.

XCAP is issuing 439.2m shares at a price of 0.35p each, which values the purchase at £1.54m. Nitin Parekh, who founded Hume Capital, will take over as chief executive of XCAP and current boss Daron Lee will leave the company. Parekh will have an annual salary of £120,000.

A placing at 0.35p a share will raise up to £2.4m and help to finance additional working capital. A capital reorganisation is required in order to reduce the par value from 0.5p to 0.1p so that the shares can be issued. One year ago XCAP raised £1.4m at 2.75p a share and when it joined Aim on 17 September 2010 it raised £5m at 4.5p a share.

New, Hong Kong-based investors are buying some of the shares and XCAP is keen to grow its operations in Asia, where Parekh has experience. Despite the placing price’s large discount to the market price the reaction has been favourable. Shares in XCAP have risen 0.05p to 0.53p, valuing the existing business at £2.31m.

Chris Potts, who introduces business to the firm will receive 14.3m shares in lieu of £50,000 in fees and he is also subscribing for £125,000 worth of shares in the placing.

XCAP has 24 clients and a small exposure to the Middle East and Asia. XCAP is losing money but it hopes that the additional business will help it to return to profit. The broker plans to move into the oil and gas sector on the back of the expertise it has acquired.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFSeptember2012_36.pdf