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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Acp Capital | LSE:APL | London | Ordinary Share | GB00B0T9K295 | ORD 0.1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.375 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:7762Q ACP Capital Limited 06 February 2007 Date: 6 February 2007 On behalf of: ACP Capital Limited ("ACP Capital or "the Company") For immediate release ACP Capital Limited (AIM: APL) ACP Capital announces intended development plans ACP Capital Limited ("ACP Capital" or the "Company") is pleased to announce its intended development plans for the future roll-out of its integrated finance strategy, including proposals for further funding facilities, managed vehicles and strategic platforms (the "Intended Development Plans"). By implementing these plans, the Company's directors (the "Directors") believe that the Company would be able to create further origination and funding opportunities as well as further value creation for shareholders. In relation to the implementation of the Intended Development Plans, it is the Company's intention to raise approximately #150 million before costs through a placing of new ordinary shares on AIM (the "Proposed Placing"). Following a successful placing, the Directors believe that the Company would be well positioned to implement the Intended Development Plans. Intended Development Plans In order for the Company to develop further its integrated finance and asset management business in the European SME market, the Company has established plans for the intended development of its strategic platforms, funding facilities and managed vehicles. In progressing its Intended Development Plans, the Company has entered into advanced discussions or heads of terms in relation to a number of potential investments or joint ventures as described below. In addition, the Company is developing its infrastructure in continental Europe with the intention of opening offices in Milan and Munich, which is also described below. The Company may also consider acquisitions or investments, as originally stated in the admission document of the Company dated 20 December 2005 (the "Admission Document"), in complementary asset management businesses. The Directors believe that the successful implementation of the Intended Development Plans would allow the Company to: * establish its presence as a specialised integrated finance provider in the European SME market where the Directors believe that a significant market opportunity exists; * offer, through its own and its managed vehicles' funding facilities, a comprehensive range of financing alternatives to the SME market; * broaden, through additional strategic platforms, the origination of investment and funding opportunities for itself and its managed vehicles; and * achieve substantial revenue diversification, with a particular focus on the expansion of cash revenue primarily from its asset management business and funding lines, targeted to represent in excess of 50 per cent. of total revenue by the end of 2008. In order to implement the Intended Development Plans, the Company proposes to raise approximately #150 million in the Proposed Placing. Subject to market conditions, the Company may wish to raise up to #200 million. Intended Development of funding facilities ACP Capital currently has full equity underwriting capabilities in addition to ACP Mezzanine's dedicated mezzanine capabilities. The Company intends to expand these facilities to include comprehensive senior debt funding lines in order to finance the origination flow generated by the Company's proposed managed vehicles and strategic platforms. These additional "Facilities" would include: Senior Debt Underwriting Vehicle - (the "SDV"): The Company intends to put in place a leveraged loan underwriting facility of up to Euro150 million, which the Directors believe may require up to Euro75 million of equity and up to Euro75 million in third party debt, in order to provide non-investment grade senior funding to the SME sector. The SDV would provide this capability and would generally syndicate a majority of the loans that it underwrites. This facility would, when combined with ACP Mezzanine's underwriting capabilities of up to Euro75 million for an individual transaction and up to Euro25 million of equity provided by the Company or a managed vehicle, enable the Company and its managed vehicles to offer an underwritten finance package of up to an aggregate of Euro250 million per transaction. This would represent the development of the Company's ongoing underwriting and syndication activities in which the Company's management has significant experience. Investment Grade Funding Vehicle - (the "IGV"): The Company intends to put in place the IGV by taking a first loss equity position and raising a credit line (AAA to BBB rating equivalent) with third party banks which will enable the Company to offer funding lines for diversified pools of assets to the SPs, such as equipment leasing or container/railcar leasing. The Directors believe that these funding lines may be a series of individual facilities which could be pooled once critical mass is achieved, thus generating economies of scale. The equity position required will vary depending on the asset type concerned, but is expected to range between approximately 3.0 per cent. and 12.0 per cent. The Company anticipates an equity requirement of up to Euro40 million by 2008 for the IGV. Pfandbrief - Real Estate Investment Grade facility: The Company is currently in discussions with a view to acquiring a strategic equity stake in a small German bank which holds a license to issue Pfandbrief (the principal funding instrument used by German mortgage bankers). Alternatively, the Company may opt to obtain a Pfandbrief licence itself through the creation of a dedicated vehicle, a process which the Directors believe could take approximately 9 to 12 months. Either approach is expected to require an initial minimum equity investment of approximately Euro50 million. The Directors believe that Pfandbrief issuance offers a competitive source of low risk investment grade real estate financing and is the largest uniform asset class in the European bond market. The Company expects to offer this product as part of its comprehensive financing platform as a source of senior debt funding for real estate assets. Further strategic platforms The Company set out as an objective in its Admission Document the development of strategic platforms (the "SPs"). These targeted vehicles, in which the Company may take significant minority equity stakes, would take the form of origination platforms focusing primarily on the provision of a series of financing products to the SME sector. The Company believes that it could, as a preferred funder, provide competitive financing to enable these SPs to expand their various loan products into areas such as senior and subordinated corporate loans (secured and unsecured), off balance sheet financing (i.e. sale- leasebacks), and equipment financing (such as IT hardware, telecommunications and motor vehicles). By enabling such SPs to increase their product ranges, the Company would seek to benefit from an ongoing source of funding origination that it is hoped will provide a flow of opportunities for its funding facilities and its managed vehicles. The Directors believe that the Company would also benefit, as a shareholder, from any potential increase in the equity value of these SPs. However, equity investments inherently carry a high degree of risk and it is also possible that such investments could decline in value. In expectation of the proposed placing raising approximately #150 million, the Company is currently actively pursing the following SP initiatives whilst working with external investment banks to identify further opportunities for SPs in key markets such as the UK, France, Italy and Germany. UK SME focused finance business: The Company intends to allocate up to #30 million to invest in a strategic equity stake in at least one UK finance business. The Company is currently in discussions with two such companies with a view to taking a minority equity stake and/or providing a series of financing facilities funded through the Facilities and ACP Mezzanine. The Company has recently announced that it has acquired a shareholding in excess of 8 per cent. in one of these companies, namely Davenham Group plc, a lender to the UK SME sector. The Directors intend for the Company to target a flow of assets to the Company and its managed vehicles from such opportunities (if completed and once fully operational) of approximately #100 million in its first year and approximately #250 million in its second year of operations. Italian SME focused finance business: The Company intends to allocate up to Euro20 million to the development of a dedicated Italian SME financing platform. To this end, the Company is currently in discussions to create a joint venture with Eurinvest, an established Italian investment house, with a view to gaining a foothold in the Italian SME market. The Company is currently reviewing an opportunity to acquire a stake of approximately 50 per cent. stake, alongside one of Eurinvest's investment vehicles, in an Italian SME financing business for approximately Euro5 million with a potential further capital investment of around Euro15 million to finance the business's growth. The Directors intend to target a flow of assets to the Company and its managed vehicles from such an Italian finance business (if completed and once fully operational) of approximately Euro50 million in its first year and approximately Euro125 million in its second year of operations. In parallel, Eurinvest, has proposed, subject, inter alia, to board and regulatory approval, to invest approximately Euro5 million in the Proposed Placing and has expressed an interest in placing a non--executive director on the Company's Board of Directors. If Eurinvest participates in this way in the Proposed Placing, it is expected that Eurinvest would be invited to nominate a non-executive director to the Company's Board of Directors. French SME focused finance business: The Company has submitted an offer letter for a minority equity investment in a French finance business. The Company anticipates equity funding of up to Euro40 million to invest in and grow the target. The Directors intend for the Company to target a flow of assets to the Company and its managed vehicles from such a French finance business (if completed and once fully operational) of approximately Euro150 million in its first year and approximately Euro275 million in its second year of operations. German SME focused finance business: The Company is currently in discussions with regards to (a) acquiring a stake in a small but established German bank with experience in corporate SME and real estate lending, including the ability to issue Pfandbrief or (b) acquiring its own German banking licence. The Company also intends to provide funding lines for identified loan products to independent German SME loan originators. Intended Development of Managed Vehicles As part of its Intended Development Plans, the Company intends to expand its asset management business through the establishment of additional managed vehicles, capitalised predominantly with third party equity and managed by the Company. The managed vehicles are intended to be designed to take advantage of the planned flow of asset opportunities from the expansion of the Company's funding facilities and strategic platforms. Certain of the managed vehicles may also create a flow of finance opportunities in their own right. In 2007, it is intended that the managed vehicles the Company proposes to launch will include ACP Strategic Equity and ACP High Income, both of which are described below. The Company has already begun acquiring and warehousing assets on its balance sheet which are intended to be transferred to both ACP High Income and ACP Strategic Equity. The Company intends to warehouse assets on its balance sheet until such time as the volume of assets held justifies, in the opinion of the Directors, the launch of the relevant dedicated managed vehicle and the resulting raising of third party equity. The Company is currently in discussions regarding the launch of two additional managed vehicles, a real estate vehicle ("ACP PropCo"), and an infrastructure vehicle ("ACP Infrastructure I"), which are also described below. The Company may also participate in subsequent fundraisings by ACP Mezzanine and also in fundraisings by future managed vehicles. The Company expects to maintain an equity holding in each managed vehicle of approximately 25 per cent. on a long term basis. ACP High Income: The Company is targeting an initial #25 million to #30 million to warehouse assets for a proposed high income managed vehicle ("ACP High Income") which the Company expects to be the first of a number of listed funds geared primarily towards retail investors. It is intended that ACP High Income will invest in a portfolio comprised primarily of senior debt instruments from the Company's leveraged loan business, and through the primary and secondary markets. In order to make ACP High Income more attractive to the retail market, the Company may take a first loss position in ACP High Income which would offer investors a degree of capital protection. In addition, the Company is currently in the documentation phase for a funding line with a third party institution to support ACP High Income with leverage of up to 75 per cent. The Company is presently in the process of warehousing assets intended for ACP High Income including a #6 million investment in the Colonnade II CDO and a Euro10 million portion of the Nordsee senior debt package, both of which have been identified for transfer to ACP High Income. ACP Infrastructure I: The Company intends to launch a series of dedicated infrastructure vehicles that would fund equity holdings in infrastructure assets. The Company has signed a term sheet with an international operator in the shipping container and railcar sectors with a view to developing an off balance sheet capability for that operator. The Company currently intends to launch ACP Infrastructure I late in 2007 or early in 2008 following the warehousing of approximately Euro100 million of such assets with the intention of additional funding being provided by the Company's Facilities and managed vehicles. ACP PropCo: The Company intends to develop a dedicated real estate vehicle that will act as the preferred partner for the Company's managed vehicles and SPs, focusing primarily on the provision of sale/leaseback products. Similarly to ACP Infrastructure I (see above), the Company is targeting to warehouse approximately Euro100 million of assets before launching the vehicle. ACP Strategic Equity: The Company intends to establish a strategic equity vehicle through which it would intend to hold strategic equity investments in companies and vehicles, such as IFR Capital. The Directors believe that through ACP Strategic Equity, the Company could generate significant returns which are expected to be achieved through the combination of the Company's integrated finance capabilities and commitment to assisting these companies in growing their businesses. ACP Strategic Equity is expected to warehouse approximately Euro 60 to Euro80 million of equity holdings (including its stake in IFR Capital), before it is launched, which is anticipated to occur by the end of 2007. The Company's intention is that ACP Strategic Equity will differentiate itself from private equity in that it (a) will not, generally, seek majority control of target companies, (b) can have a longer term investment period, and (c) will usually invest as part of an overall integrated finance approach, which the Directors believe to be a distinct advantage in the European SME market. The above descriptions of the strategic platform, funding facilities and managed vehicles do not constitute financial projections of any kind, but instead represent the Company's strategic business objectives and targets. Although the Company will use all reasonable endeavours to establish the strategic platforms, funding facilities and managed vehicles to meet the cash flow and strategic business targets described above, they may not be achieved and actual results may vary significantly from targeted results. The Company does not provide assurance of or guarantee the formation of or the success of any of its strategic platforms, funding facilities or managed vehicles. In parallel, the Company's anticipated "flow of assets" may take at least one year post the initial investment to such SME being made. Anticipated investment requirement under the Intended Development Plans Further to the Company's plans to develop its strategic platforms, funding facilities and managed vehicles described above, the Company's estimated investment requirements during 2007 and 2008, and estimated sources of funds are summarised as follows: Illustrative Sources and Uses of Funds (2007 & 2008 combined) Sources of funds Cash on Balance Sheet #10m Repayment of Loans #14m Net Proceeds from proposed Placing #144m Corporate Debt #72-92m Total #240-#260m Uses of funds Equity Investments in Strategic Platforms #100m-#115m Equity to Funding lines #70m-#80m Net Equity Investments in Managed Vehicles #70m-#80m Total #240m-#275m As set out in the table above, a part of the Company's required funding is intended to be financed by corporate debt facilities, which the Company intends to limit to 3 times EBTDA (but before interest income from cash on balance sheet and interest cost of corporate debt). Anticipated financial effects of the Intended Development Plans The Directors believe that the Company's financial performance will benefit under the Intended Development Plans in the following key respects: * increased assets under direct investment or management, on which the Company is able to generate its targeted returns and investment management and performance fees; and * enhanced diversification of revenue generation. Financial Targets of the Company Under the Intended Development Plans, the Company's financial targets are to: 1. have funds under management and direct investments in strategic platforms in excess of #1.5 billion in terms of gross asset value by the end of 2008; and 2. generate total revenues in excess of #70 million by the end of 2008, of which at least 50 per cent. would consist of cash income Diversified Revenue Generation In adopting its planned strategy under the Intended Development Plans, the Company targets that by the end of 2008 it will have put in place a diversified revenue stream consisting of recurring revenues such as asset management and incentive fees, dividend flow from various managed vehicles, underwriting fees, net interest margin from loans, and, in parallel, capital gains (through mark-to-market or realisation) on its strategic equity holdings and equity holdings in managed vehicles. Organisational Build-Up The Group currently has 11 contracted employees. Given its increasing advisory role, ACP Capital UK LLP, the advisor to the Company, intends to continue to recruit in London with an intention to increase its team by a further three to five people in 2007. The Company is putting in place its administrative functions in Jersey and has hired its Financial Controller, Antony Perez, who will commence employment at the end of March 2007. Antony Perez will work closely with R&H Fund Services ( Jersey) Limited, who act as the Company's administrators and company secretary. The Company is currently intending to open up offices in both Milan and Munich, either independently or alongside its joint venture partners, as part of its continued focus on developing its activities in these key markets. Nikolaj Larsen, the Company's Head of Strategic Investments will relocate to the Munich office in March 2007. In parallel, the Company has made one local hire and is currently in discussions with a further individual with a goal of building a 5 to 7 person team in 2007. Derek Vago intends to relocate to Geneva by the end of April 2007, in order to be more closely located to the German, Italian and French markets. By the end of 2007, the Company, including ACP Capital UK LLP and, through joint ventures, intends to have a total of approximately 25 employees. The Proposed Placing The Proposed Placing is intended to raise approximately #150 million (gross of expenses) and the proceeds are intended to be used as described above. The Company intends to hold meetings with potential investors with a view to implementing the Proposed Placing during March 2007. The Proposed Placing is dependent upon Shareholders passing the Special Resolutions at the AGM. As at the date of this document, the Company has an authorised share capital of #100,000 comprising 100,000,000 Ordinary Shares of which 77,237,497 Ordinary Shares are in issue and fully paid. If the Special Resolutions are passed, the authorised share capital of the Company will be increased to #350,000 divided into 350,000,000 Ordinary Shares. It is intended that new Ordinary Shares issued under the Proposed Placing will not be offered generally to Shareholders, whether on a pre-emptive basis or otherwise. The Directors believe that the additional cost and delay which a rights issue or open offer would entail would not be in the best interests of the Company at this time. Preliminary results for the year ended 31 December 2006 The Company has today announced its first set of preliminary annual results, for the period 30 August 2005 to 31 December 2006. The Company reported a net profit for the period of approximately #15.0 million and proposed a dividend of 3p per Ordinary Share, being a total distribution of approximately #2.0 million. The record date in respect of the dividend declared for the year ended 31 December 2006 is 16 February 2007, which is prior to the anticipated issue date of new Ordinary Shares expected to be subscribed for under the Proposed Placing. Accordingly the dividend declared for the year ended 31 December 2006 will not be paid in respect of new Ordinary Shares issued under the Proposed Placing. It is anticipated that new Ordinary Shares issued under the Proposed Placing will rank pari passu with all existing Ordinary Shares in respect of all future dividends declared or made. Current trading and prospects In the current financial year, the Company is trading in line with the Directors' expectations and the Directors continue to view the prospects of the Company with confidence. Dividend policy In the Admission Document it was stated that the Directors would, subject to satisfactory trading and the availability of distributable reserves, seek to declare a dividend for the year ending 31 December 2007 of 6 pence per Ordinary Share. If the Proposed Placing is completed, the Directors would, subject to satisfactory trading under the Intended Development Plans and reserves as stated above, seek to declare dividends for 2007 of 3 pence per Ordinary Share. In subsequent years the Directors would seek to increase the level of declared dividends and would, subject to trading and reserves as stated above, seek to declare a dividend for 2008 of 5 pence per Ordinary Share. Derek Vago, Chief Executive Officer said: "The Company has developed strongly during its first year and exceeded the objectives set out at the time of its admission and we have therefore increased our dividend recommendation from 2.0 pence per ordinary share to 3.0 pence per ordinary share. In 2006 we have built an experienced team and launched our first two managed vehicles. We now have a strong base from which to grow. We have today announced plans to raise circa #150 million through a placing, which could enable us to grow the company further, in order for it to attain its pan-European integrated finance objectives for the SME sector and enabling it to generate cash revenue from diversified sources such as management / performance fees, dividends, net interest income and underwriting fees. We believe in having a local presence in our key markets to develop our SME business and therefore we aim to establish offices in Munich and, through a potential joint venture with Eurinvest, in Milan during the first half of this year. By the year ending 31 December 2008, the Company targets total funds under management and direct investments in strategic platforms in excess of #1.5 billion in terms of gross asset value, and targets revenue in excess of #70 million, of which more than 50% is targeted to be cash revenue from sources such as management and performance fees, underwriting fees, dividends and net interest margins from funding facilities. Finally, I would like to take this opportunity to thank our shareholders for their continued support and belief in us during the Period and look forward to delivering increased value to them through the Company's development plans." This release does not constitute an offer to sell shares in the Company. Reference is made to the circular to shareholders dated today's date, which can be accessed on the Company's website (www.acpcapital.com) and, in particular, to the section headed "Risk Factors" in Part II thereof, and this release should be read in conjunction with the information contained therein. For further information please contact: Redleaf Communications Rob Bain: +44 (0) 20 7822 0200 Notes to Editors: ACP Capital Limited ACP Capital is a Jersey-incorporated niche integrated finance provider specialising in the European SME market whose shares were admitted to trading on AIM in January 2006. As an integrated finance specialist, ACP Capital can offer a combination of equity, mezzanine and senior debt to companies in niche markets, such as the German "Mittelstand" (small and middle-sized privately-owned companies), and for asset backed transactions, for example, in the real estate and infrastructure sectors. As an asset manager, ACP Capital manages a series of investment vehicles that can provide the required funding for its integrated finance capabilities. ACP Capital intends to launch at least 2 managed vehicles each year in specific sectors in its target markets. ACP Capital's strategy is to develop strong synergies between its broad funding capabilities and its various managed vehicles, providing optimal financing solutions to its clients while securing a strong flow of recurring revenue for its core business. ACP Capital's CEO is Derek Vago, who is assisted on the Board by Non-executive Directors Heiner Kamps, Francois Georges, Alan Braxton and Executive Directors Nikolaj Larsen and Eric Youngblood (as well as two other Non-Executive Directors). A further key team member is Jeff Bennett, who is the Chief Investment Officer for ACP Mezzanine. For more information please see www.acpcapital.com ACP Mezzanine Limited ACP Mezzanine Limited is a Jersey-incorporated company which listed on AIM in July 2006 and whose strategy is to pursue a primary strategy as a mezzanine lender, originating, structuring and underwriting the majority of its mezzanine investments. ACP Mezzanine's investment strategy is implemented and managed by a subsidiary of ACP Capital through an investment management Agreement. ACP Mezzanine's strategy is different from that followed by a number of participants in the mezzanine financing market, which focus on acquiring assets directly from third parties through a syndication process. ACP Mezzanine lends primarily across Europe, with origination arising through a direct integrated finance approach alongside ACP Capital's strategic platforms and managed vehicles, and, to a lesser extent, purchases assets in the secondary market if the expected risk adjusted returns are attractive. It is expected that the integrated finance approach will account for at least two thirds of ACP Mezzanine's investments over time. ACP Mezzanine's Board includes Derek Vago, Jeff Bennett, Christophe Tanghe and 2 other Non-Executive Directors. In addition, Wolfgang Mellinghoff is expected to be appointed to the Board in the near future. IFR Capital Plc IFR Capital Plc ("IFRC"), which was admitted to the AIM list of the London Stock exchange in a circa Euro135m flotation in November 2006, has been established to act as an acquisition platform intending to target small and mid-sized businesses in the continental European food industry, within three sub-sectors: retail (mainly shops/restaurants), industry (wholesale and production) and distribution. IFRC will firstly focus on the retail and industry segments as the Directors of the Company believe that these areas offer an initial opportunity for achieving synergies and shareholder returns. The Directors believe that the distribution segment of the industry is to be relevant but only once IFRC has reached a certain scale. The Directors believe that there is a unique consolidation opportunity in the food retail sector in Continental Europe, and especially Germany, and anticipate a need for cross border consolidation with an increasing focus on brands and chains. At the same time, the Directors believe that the succession problems for many small and mid sized companies may lead to a number of potential acquisition opportunities. The Directors believe that Heiner Kamps with his track record will be viewed as a preferred bidder within the food industry, especially as the Directors believe that there is a hesitant view both among owners and managers of small and medium-sized enterprises towards private equity investment companies. As such, the Directors believe that IFRC has an opportunity to approach various targets in Germany 'off the market'. This information is provided by RNS The company news service from the London Stock Exchange END MSCGCGDDRUGGGRL
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