Vector Capital PLC

21 December 2020

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM, THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.

This announcement is an advertisement and not an admission document or a prospectus. This announcement is not and does not constitute or form part of, and should not be construed as, an offer of securities for subscription or sale in any jurisdiction nor a solicitation of any offer to buy or subscribe for, any securities in any jurisdiction, nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This announcement does not constitute a recommendation regarding any securities. Prospective investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and regulation and on the basis of the information in the final admission document ("Admission Document") intended to be published by Vector Capital plc ("Vector Capital" or the "Company"), and any supplement thereto, in connection with the placing of ordinary shares of 0.5 penny each ("Ordinary Shares") and the proposed admission of the entire issued and to be issued ordinary share capital of the Company to trading on AIM, a market operated by the London Stock Exchange plc .

Vector Capital plc

("Vector Capital", the "Company" or the "Group")

Intention to Float on AIM

GBP 3.1m Placing and proposed Admission to trading on AIM

Vector Capital plc, a commercial lending group that offers secured loans primarily to businesses located in the United Kingdom, announces its intention to seek admission of the entire issued and to be issued ordinary share capital of the Company to the AIM market of the London Stock Exchange plc ("Admission"), and a conditional placing of 8,052,895 new Ordinary Shares, at a price of 38 pence per share (the "Placing Price"), to raise gross proceeds of GBP3.1 million (the "Placing").

Admission and commencement of dealings on AIM are expected to take place at 8:00 a.m. on 29 December 2020, under the ticker VCAP. Based on the Placing Price, the market capitalisation of the Company will be GBP16.0 million on Admission. On Admission, the Company will have 42,052,895 Ordinary Shares in issue.

The proceeds of the Placing will be used by the Company to further grow its loan book and for general working capital purposes.

Allenby Capital is acting as Nominated Adviser and Broker to the Company.

Overview of Vector Capital

Vector Capital provides secured, business-to-business loans to SMEs based in England and Wales. Loans are typically secured by a first legal charge against real estate. The Company's customers typically borrow for general working capital purposes, bridging ahead of refinancing , land development and property acquisition . The loans provided by the Company are generally for a 12-month term with fixed interest rates of between 11 and 14 per cent.

The Company's loans to its borrowers are financed primarily from a combination of its own resources and debt facilities. The debt facilities are primarily provided by Shawbrook Bank totalling GBP15.0 million and Aldermore Bank totalling GBP10.0 million . As at 30 September 2020, the Company has a loan book of GBP34.7 million, with 61 live loans, an average loan size of approximately GBP0.57 million and average loan to value ("LTV") of 49.9 per cent.

Key Strengths

   --         Experienced management team with extensive sector experience 

The current management team has built up Vector Capital organically and has been operating in the secured commercial lending market for more than 20 years

   --         Established industry network 

The Company has an established industry network of wholesale banks, commercial finance brokers, surveyors and advisers. It has relationships with brokers who introduce Vector Capital to potential borrowers that match the Group's lending criteria

   --         Bespoke IT infrastructure 

Vector Capital has a custom designed, cloud-based software platform that provides audit trails, loan documentation, relationship management and accounts interface

   --         Speed of loan approvals 

Vector Capital has the ability to make decisions in principle and outline terms on a "same day" basis once brokers submit proposals via the Company's online portal

   --         Bespoke solutions 

The Company has flexibility and ability to provide bespoke solutions on a case-by-case basis

   --         Strong risk management 

It has effective credit and risk management controls, demonstrated by the fact that Vector Capital has not written off a principal debt

   --         A track record of profit and cash generation 

In the year ended 31 December 2019, Vector Capital generated sales of GBP3.59 million and a profit before tax of GBP1.97 million. In the six months to 30 June 2020 the unaudited results recorded sales of GBP2.13 million and a profit before tax of GBP1.26 million

   --         Current trading supported by market demand 

Bridging loan books in the UK grew to GBP4.5 billion in 2019, an increase of 19.7 per cent. compared to 2018(1) . Demand for Vector Capital's new loans remains strong and, as at 30 September 2020, it had loan pipelines totalling GBP3.4 million in aggregate

(1) The Association of Short Term Lenders, March 2020 ( https://www.theastl.org/index.php/13-news/260-bridging-loan-books-grow-by-nearly-20-in-2019)

Progressive Dividend Policy

The Company has a track record of paying dividends. The Company paid a dividend of GBP699,000 in respect of the full year ended 31 December 2019 and in October 2020 declared and paid an interim dividend of GBP400,000 in respect of the year ending 31 December 2020.

It is anticipated that the Company will pay a dividend bi-annually, and that the first dividend post Admission will be the final dividend for the current financial year ending 31 December 2020 and will be declared following publication of the annual results.

Agam Jain, CEO of Vector Capital said:

"Our plans to bring Vector Capital to AIM are founded on a strong track record of organic growth. We have been a trusted lender by brokers for more than 20 years, due to our flexibility, speed and integrity. The successful fundraising and admission to AIM will enable us to increase our lending power and satisfy the demand for fully secured business loans in the SME market, taking the business to its next stage of growth. With a robust and scalable IT infrastructure in place to facilitate an increasing loan book, combined with our low overheads and agility, Vector Capital is strongly placed to expand, deliver on its strategy and provide returns to shareholders."

Further enquiries:

 
 Vector Capital plc 
  Agam Jain                            c/o TB Cardew 
 Allenby Capital Limited 
  James Reeve (Corporate Finance)      +44 (0) 20 3328 5656 
  Tony Quirke (Sales)                  www.allenbycapital.com 
 TB Cardew 
  Shan Shan Willenbrock/               + 44 (0)7775 848537 
  Charlotte Anderson                   + 44 (0)20 7930 0777 
                                       vector@tbcardew.com 
 

Strategy

The Company's strategy is to continue working with selected commercial finance brokers and concentrate on the provision of short-term unregulated loans of the same nature as its existing loan book. The Directors consider that Vector Capital is the lender of choice for borrowers who need fast decisions and quick turnarounds to secure loans of the nature of those provided by the Company.

The Directors consider there to be sufficient demand for loans from UK borrowers that fit within Vector Capital's existing lending criteria to meet the Directors' growth expectations, without the need for the Company to materially alter the types of loans it offers.

To achieve its objective of consistent growth, the Company will seek to gradually increase its lending capital through the extension of its debt facilities from wholesale banks and take advantage of the capital markets in order to raise further capital as required.

Use of Proceeds and Reasons for Admission

Reasons for Admission

-- Allow Vector Capital access to equity capital in a cost effective and timely manner in order to provide the Company with the financial flexibility to further increase its lending capacity and satisfy the demand for loans as provided by the Company ;

   --      help the Company to attract and retain high-quality staff; 

-- enhance the credentials of the Company with existing and potential customers, introducers and lenders; and

   --      help to raise the Company's profile in the UK 

Use of proceeds

The net proceeds of the Placing are expected to total approximately GBP2.6 million. The Directors intend to use these funds as follows:

   --      balance sheet lending; and 
   --      general working capital. 

Initially, the net Placing proceeds will be used to increase the loan book directly. Once the loans have been issued the Group has the option to drawdown amounts from the banks against the facility to increase the loan book further. The Directors further believe that the stronger balance sheet as a result of the Placing will increase the Company's prospects of increasing its banking facilities, to further increase the Group's lending capacity.

The Board

Robin Stevens, Chairman

Robin is a Chartered Accountant and a former corporate finance partner and Head of Capital Markets of Crowe UK LLP, having held senior corporate finance and audit partner positions with Mazars LLP and MRI Moores Rowland LLP. Having retired as a partner he is now a Senior Advisor to Crowe and also provides consulting and advisory services to emerging companies operating in the UK and overseas. Robin has had an extensive career in corporate finance including corporate advisory and reporting assignments, raising capital, management buyouts, capital reconstructions, and pre-flotation planning. He has also advised on acquisitions and disposals by public and private companies as well as many IPOs and secondary offerings in the UK and overseas. Robin has specialised in working with international companies and regularly speaks on a range of corporate finance and capital markets issues to international business audiences.

Agam Jain, Chief Executive Officer

Founder of the Company , Agam took his previous IT company, Jayex Healthcare, to IPO on the Australian Stock Exchange in 2015. Agam is responsible for the strategic management of the Group. He leads the management team of the Group with the aim of meeting the objectives of the business in growing the loan book in accordance with the Group's credit policy, with a view to delivering consistent returns for investors and managing relationships with stakeholders. In addition to his knowledge of and experience in the loan industry generally, Agam has general management and business-process experience and is familiar with several major software and accounting systems, such as Oracle NetSuite, ERP, CRM and Sage. Agam has been building the secured finance business now operated by the Group for over twenty years. He is a graduate of Imperial and Kings Colleges in Physics and Management Science.

Jonathan Pugsley, Finance Director

Jon is a Chartered Certified Accountant by profession, holding a practicing certificate since 2007. Having worked in private practice for ten years, he founded Allazo Accounting & Consultancy in 2012, with two offices located in Hertfordshire. He has been invited to act as finance director for a number of clients. His focus is on helping his clients grow through implementing better systems and structures and ensuring a greater understanding of their finances. Jon has provided hands on accounting support to the Group and is a director of each Group company. He oversees the finance responsibility and interfaces with the external auditors.

Ross Andrews, Non-Executive Director

Ross is an experienced corporate adviser with 30 years' investment banking and stockbroking experience, advising companies and management teams on public market transactions. He was a main board director of Zeus Capital during which time the firm grew from a small corporate finance advisory business in the North West of England to an established investment banking operation based in London, Manchester and Birmingham. He is a non-executive director of several listed companies and brings extensive financial, commercial and corporate governance experience to the Board. Most recently, he established Guild Financial Advisory Limited, an independent corporate finance boutique focused on advising fast growing companies (both private and listed).

Important Information

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

Recipients of this announcement who are considering subscribing for or acquiring Ordinary Shares following publication of the Admission Document are reminded that any such acquisition or subscription must be made only on the basis of the information contained in the final Admission Document, which may be different from the information contained in this announcement. No reliance may be placed, for any purpose whatsoever, on the information or opinions contained in this announcement or on its completeness. To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company or Allenby Capital, or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with this announcement.

Allenby Capital is acting exclusively for the Company and no one else in connection with the Placing and Admission referred to herein. Allenby Capital will not regard any other person as its client in relation to the Placing and Admission referred to herein, and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for giving advice in relation to the Placing and Admission or any transaction or arrangement referred to herein.

This announcement is only addressed to, and directed at, persons in member states of the European Economic Area who are qualified investors within the meaning of Article 2(e) of the Prospectus Regulation (EU 2017/1129) ("Qualified Investors"). In addition, in the United Kingdom, this announcement is addressed to and directed only at Qualified Investors who are: (i) persons having professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net-worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO; and (iii) persons to whom it is otherwise lawful to communicate it to. It is not intended that this announcement be distributed or passed on, directly or indirectly, to any other class of person and in any event, and under no circumstances should persons of any other description rely on or act upon the contents of this announcement.

Neither this announcement nor any copy of it may be: (i) taken or transmitted into or distributed, directly or indirectly, in the United States (within the meaning of regulations made under the US Securities Act of 1933, as amended); (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Canada, Australia, New Zealand or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws; or (iii) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such a solicitation or offer. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

The Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. No securities commission or similar authority in Canada has in any way passed on the merits of the securities offered hereunder and any representation to the contrary is an offence. No document in relation to the proposed placing of the Ordinary Shares has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance. Accordingly, subject to certain exceptions, the Ordinary Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from a restricted jurisdiction or offered or sold to a person within a restricted jurisdiction.

The date of Admission may be influenced by factors such as market conditions. There is no guarantee that the Admission Document will be published or that the Placing and Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to the Placing and Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. The value of shares can decrease as well as increase. This announcement does not constitute a recommendation concerning the Placing. Persons considering an investment in such investments should consult an authorised person specialising in advising on such investments.

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Company's board of directors (the "Board") expectations of external conditions and events, current business strategy, plans and the other objectives of management for future operations, and estimates and projections of the Group's financial performance. Though the Board believes these expectations to be reasonable at the date of this announcement they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements.

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

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December 21, 2020 02:00 ET (07:00 GMT)