Tavistock Investments to raise £2.1m to fund Price Bailey acquisition

Tavistock Investments has agreed to acquire financial advisory firm Price Bailey Financial Services, though its shares were sent south on Wednesday by news that it plans to fund the purchase with a discounted £2.1m fundraising.

The AIM-listed company will place 70m shares sold at around 3p each to raise about £2.1m before expenses, a discount from recent levels close to 4p and a year's high just shy of 8p.

The £3.6m acquisition of Price Bailey is expected to be completed on 29 November, with £2m paid in cash and with over 21.2 shares.

A second cash payment is expected on to be made on the first anniversary of the completion date of £150,000, with a variable payment of £500,000 that will be reduced if there are any upheld regulatory complaints in the first year.

Price Bailey adds about £313m of new funds under advice, including £166m of funds being managed on a discretionary basis.

Tavistock believes the acquisition will provide a platform to launch its management services to higher net worth clients and benefit from earnings enhancements.

In the year ended 31 March, Price Bailey had earnings before interest, taxation, depreciation and amortisation (EBITDA) of £391,000 on turnover of £2.1m.

The company also said that its advisory businesses is trading profitably, including its investment management business, Tavistock Wealth, which has over £520m of funds under management, of £350m is managed on a discretionary basis.

It has recently focused on organic growth and has invested in recruitment and the marketing of its investment proposition to other advisory firms.

EBITDA for the year to 31 March 2017 is expected to grow and the company plans to introduce a dividend stream.

Shares in Tavistock Investments were down 19.75% to 3.15p at 0904 GMT.