REG - Begbies Traynor - Acquisition

Begbies TraynorAnnouncement

25/07/2022 07:00

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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 £4.5m comprised of £4.0m 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 £13.5m (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 £500m for its clients over
the last year.

 

In its financial year ended 31 December 2021, Mantra (on a combined basis)
achieved revenue of £4.2m and normalised pre-tax profits of £1.2m (when
reported on the same basis as the group). It had net assets of £2.6m
(including cash of £1.3m) 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.£8m and
arranged finance in excess of £800m 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 £18.0m on a cash
free and debt free basis with an agreed level of working capital. The
consideration is structured as follows:

 

·   Initial consideration of £4.5m (subject to any cash free/debt free and
working capital adjustments), to be satisfied as £4m 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 £13.5m (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  £5.5m subject to average PBT of £2.0m in years 1 and 2

o  £8.0m subject to average PBT of £4.0m in years 3 and 4.

 

The initial cash consideration will be funded through the group's existing
financial resources, which comprised net cash of £4.7m 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 (mailto: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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