LONDON (Alliance News) - FairFX Group PLC, which uses a cloud-based peer-to-peer payments platform to support foreign currency payments for both retail and business customers, on Monday said it has won the backing of AIM-listed activist investor Crystal Amber Fund Ltd.
Crystal Amber Fund, the owner of stakes in the likes of residential landlord Grainger PLC and Scottish digital media company STV Group PLC, has agreed to invest GBP5.0 million for 25.0 million shares in FairFX, equivalent to a 24.24% stake. Crystal Amber could come to own 29.38% of FairFX if it exercises a warrant allowing the activist to subscribe for 7.5 million shares at 27.0p per share.
That investment formed the bulk of a broader placing to raise GBP5.25 million in total, including from other institutional investors. The money will be used to increase marketing expenditure and "aggressively" target corporate card customers.
The shares were sold at 20.0 pence per share, equivalent to a discount of about 30% to the closing middle market price of 28.5p on Friday last week. Shares in FairFX were up 5.3% at 30.00p on Monday morning. Shares in Crystal Amber were up 1.3% at 147.90p.
"As well as representing a major endorsement of FairFX's business model and success to date, this investment provides the necessary resources to execute our land-grab strategy in 2016 and beyond and push aggressively into the corporate card space," Ian Strafford-Taylor, chief executive officer of FairFX, said in a statement.
In an update ahead of publishing annual results at some point in April, FairFX said that turnover increased by 32% to about GBP625.0 million in 2015, with 103,338 new customers added to take the total to 508,048. The company said a focus on "higher value" products has paid off, with new retail card customers up 40%, year on year, new wholesale dealing customers up 44% and new corporate card customers up 40%.
"The growth across retail and corporate demonstrates the success of the marketing strategy, in terms of focusing on acquiring card customers over the lower margin cash-in-the-post customers," Strafford-Taylor said.
FairFx's placing is conditional on shareholder approval. The plan is to issue the shares in two separate tranches, allowing the company to provide UK regulators with enough notice and time to raise any objections. Should the placing be limited to only the first tranche of shares, the gross proceeds would amount to about GBP1.8 million, with Crystal Amber taking a 9.0% stake.
On admission of the second tranche of shares, Crystal Amber will be allowed to appoint a representative to FairFX's board, with that right requiring the activist to hold a minimum stake of 15% in the company. The warrant, which may be exercised in up to three tranches, expires on the third anniversary of being issued.
The first tranche of shares is expected to be admitted for trading on AIM on March 30. Depending on approval from the UK's Financial Conduct Authority, the second tranche would be admitted within five business days of that date.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Crystal Amber (CRS)