The AIM-listed firm confirmed in a stock exchange announcement today that it entered into a subscription and underwriting agreement with property firm Kingswood, a subsidiary of Kingswood Property Finance, and Astoria, a Mauritian-based asset manager, to raise total gross proceeds of £9.2m.
The two majority shareholders have agreed to purchase 48 million shares at 12.8p each for a total of £6.14m.
A remaining 24 million shares will be issued to qualifying shareholders to raise a further £3.07m.
If the open offer completes and the existing shareholders purchase the entirety of the shares available, Kingswood’s and Astoria’s respective stakes will be 24.13%.
Failing that, the two majority shareholders could end up with a 36.2% stake each in the wealth manager.
The proceeds of the fundraise will be used to repay its debt, which includes £2m under the Kingswood Bridge Facility and £1.14m relating to other acquisitions.
Since the wealth manager was founded in 2011, it has been partially funded by debt.
Now, debt free, the firm’s CEO John Morton thinks European Wealth will be a “far more attractive business”.
“It feels like a cloud has been taken away,” he said.
“From the point of view of the operations of the business, we won’t be constantly looking over our shoulder, looking at the interest we have to pay so our cashflow will improve significantly. And inevitably, that will then have an effect on bottom line profits.”
