Following extensive share price growth and a rise of £10m gross via placement of approximately 8m new ordinary shares at 130 pence, General Capital Group plc, the asset and venture finance specialist, now has grand plans to capitalise on the vast business potential of the broker market in 2007.

General Capital, which recently peaked with a share price of 158p, has used some of its share proceeds to acquire Norton Folgate plc, a Hertford based asset finance broker, for approximately £1.3m in cash. It has also allotted and issued 812,307 of new ordinary shares credited as fully paid with a value at the placing price of approximately £1.1m.

This acquisition, which should be completed by the end of March, will allow the company’s asset finance division to expand its broking activities and accelerate growth of its own asset finance book through gaining access to business leads.

General Capital currently has about 80 brokers on its books, which source about 75 per cent of the company’s business.

Jonathan Hill, executive deputy chairman of General Capital, said: “The agreement with Norton Folgate represents another important strategic milestone for General Capital in our ambition to build a significant presence in the UK’s flexible funding solutions market.

“Norton Folgate complements the company’s asset finance offering and presents an opportunity for accelerated growth within that division.”

With over £20m of gross forward receivables, 11 funders, a diverse range of assets and an average deal size of circa £25 000, it is understandable why Norton Folgate appears a lucrative choice for General Capital.

The remainder of the share price proceeds will be used to provide working capital and redeem debt, which should result in a reduction of annual interest.

In January this year, Leasing Life reported that General Capital’s share price had increased by 50 per cent since it listed on AIM last September and had made “exceptional gains” of £1.8m due to its investments in UK energy specialist Sabien.

Furthermore, General Capital’s investments, not only in Sabien, but also Helius Energy plc and Proton, has helped the company realise and improve its venture finance business model, by increasing overall return with equity exits on top of debt.

In a continuation of that theme, Mark Edworthy, managing director of General Capital also highlighted the company’s expansion and development in 2006. He also reported loan portfolio growth of 40 per cent year-on-year and a high level of profit growth, which cannot be disclosed at this stage.

“General Capital goes from strength to strength. We have raised £10m from high quality institutional investors, which has provided us with a platform to accelerate our growth plans across all divisions. We expect to continue strong portfolio growth in 2007 in the asset finance division,” Edworthy told Leasing Life.

General Capital’s deal sizes range between £10,000 and £250,000 and while it boasts a full range of commercial assets, it is also deliberately “un-asset focussed so as to diversify risk”, according to Edworthy.

In other news, General Capital has also received increased banking facilities to £30m from HBOS, which will increase the company’s aggregate senior debt facilities to about £40m.
General Capital, which has two offices in Norwich and London and about 30 staff, has high market expectations for 2007.

“We aim to extend funding lines, continue strong growth in our portfolio in balance across all three business divisions and in the asset finance division specifically, the plan is to accelerate growth using additional resources forwarded to us from Norton Folgate,” Edworthy told Leasing Life.

Reproduced with the kind permission of Leasing Life

Leasing Life Issue: 162 - March 07
by Katherine Gregory ,
Published for the web: March 9 07 16:53
Last Updated: March 5 09 16:34
www.leasinglife.co.uk