LONDON (Alliance News) - Global Investment Strategy, which provides global settlement and safe custody services to its clients, is to join the London stock market with the reverse takeover of AIM-listed Octagonal PLC.
Octagonal, which already had owned 9.97% of GIS, is acquiring the remaining shares in the financial services company, which serves smaller institutional funds, family wealth offices and high net worth investors. GIS also provides stockbroking services.
The deal requires shareholder approval because it has been deemed a reverse takeover on account of the significant change in the AIM-listed company's business.
Octagonal, which currently has a market capitalisation of GBP3.7 million, said it has raised GBP1.7 million before expenses in a subscription to fund the deal and for general working capital needs. It is paying GBP1.5 million cash for GIS and issuing 336.1 million Octagonal shares at 2 pence each, worth GBP6.7 million.
Shares in Octagonal were up 65% to 0.306p on Friday morning.
The combined entity is to be valued at GBP11.2 million by market capitalisation on admission to AIM, though 61.64% of its 560.2 million shares in circulation will not be in public hands. The company plans to conduct a capital reorganisation through a 1-for-11 share consolidation.
The shareholders in possession of the 61.64% stake have been deemed a concert party under takeover rules, with independent shareholders set to vote on a proposal to waive the requirement for the concert party to make a general offer for the rest of the shares in the company.
Grant Roberts, a founding partner of Newgate Private Equity LLP, will be the company's chairman. GIS Chief Executive John Gunn, who is also the CEO of AIM-listed Inspirit Energy Holdings PLC, will remain in that position. Nilesh Jagatia, who is the finance director of Inspirit Energy, Clear Leisure PLC, Teathers Financial PLC and Limitless Earth PLC, has been named as finance director.
The executive directors will be joined by Martin Davison, the former head of the family office business for Oppenheimer & Co Inc in Europe, as a non-executive director.
Gunn will own 52.44% of the company's shares, with Corstone Capital Partners LLC to have a 6.64% stake. Serial AIM entrepreneur David Lenigas, who has been propelled into media limelight due to his chairmanship of UK Oil & Gas Investments PLC, one of the companies involved in the Hose HIll oil discovery near Gatwick Airport, is to own a 1.64% stake. Lenigas is the non-executive chairman of Inspirit Energy and a non-executive director of Octagonal PLC.
GIS made a GBP260,000 profit after tax on revenue of GBP1.5 million in the six months ended September 30, 2014 and profit after tax of GBP419,000 on revenue of GBP2.6 million in the 12 months ended March 31.
It had net assets of GBP2.5 million at the end of September 2014 and GBP1.9 million at the end of March that year. However, it expects to book a write down of GBP465,595 in the year to the end of March 2015 over its 54.5 million shares in Inspirit Energy Holdings.
The company intends to pay dividends to shareholders but said there is no guarantee it will do so. Its directors intend to look at potential acquisitions, it said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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