Equals Group PLC - Placing and Open Offer to raise up to £16 million
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
("Equals" or "the Group" or "the Company")
Placing and Open Offer to raise up to
· Placing with new and existing institutional investors to raise
· Open Offer with existing Qualifying Shareholders to raise up to an additional
· Proceeds of the Fundraise to accelerate corporate offering, facilitate market consolidation through bolt-on acquisitions and provide growth working capital
· Positive trading continues in-line with market expectations
"The Group has evolved significantly in recent years with the growth of our corporate offering, strategic acquisitions, which have expanded our capabilities, and being granted settlement accounts with the
"The new funds raised will enable us to accelerate our plans for our corporate offering, as we target new territories, and provide the means for further strategic acquisitions. This is an exciting time for Equals and we look forward to updating shareholders on our progress in due course."
A circular detailing the Transaction is today being posted to Shareholders (the "Circular"), together with the Application Form relating to the Open Offer. The Circular will be available to view on the Company's website at www. equalsplc.com
For more information, please contact:
+44 (0) 20 7778 9308
Cenkos Securities plc - Nominated Advisor and Joint Broker
+44 (0) 20 7397 8900
+44 (0) 20 7523 8150
+44 (0) 7747 790 221
+44 (0) 7796 325 254
+44 (0) 7983 557 851
Equals is a leading challenger brand in banking and payments that disintermediates the incumbent banks with a superior user experience and low-cost operating model. Our business enables personal and business customers to make easy, low-cost payments both domestically and in a broad range of currencies and across a range of products all via one integrated system. The Equals platform facilitates payments either direct to Bank Accounts or at 35 million merchants and over 1 million ATM's in a broad range of countries globally via Mobile apps, the Internet, SMS, wire transfer and MasterCard/
Equals provides money movement services to both personal and business customers through four channels: Currency Cards, Physical Currency, International Payments and Bank Accounts. The Currency Card and Physical Currency offerings facilitate multiple overseas payments at points of sale and ATM's whereas the International Payments channel supports wire transfer foreign exchange transactions direct to Bank Accounts. For Corporates, Equals has a market-leading business-expenses solution based around its corporate platform and prepaid card. This service can yield significant savings on a Corporate's expenses and procurement both domestically and overseas, through better controls and improved transparency. The platform also streamlines the downstream administrative processes and integrates into accounting software, thus saving costs. Equals offers retail and business bank accounts with all the functionality you would expect from a bank, namely faster payments, BACs, direct debits, international payments and a debit card.
Cenkos Securities, which is authorised and regulated in the
Canaccord, which is authorised and regulated in the
Some of the statements in this announcement include forward looking statements which reflect the Directors' current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Group's products and services). These statements include forward looking statements both with respect to the Group and with respect to the sectors and industries in which the Group operates. Statements which include the words "expects", "intends", "plans", believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue" and similar statements or negatives thereof are of a forward looking nature.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and therefore are based on current beliefs and expectations about future events. Forward-looking statements are not guarantees of future performance and the Group's actual operating results and financial condition, and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. In addition, even if the Group's operating results, financial condition and liquidity, and the development of the industry in which the Group operates are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Accordingly, prospective investors should not rely on these forward-looking statements.
These forward looking statements speak only as of the date of this announcement. The Company expressly disclaims any obligation to publicly update or review any forward looking statement, whether as a result of new information, future developments or otherwise, unless required to do so by applicable law or the AIM Rules for Companies. All subsequent written and oral forward looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph. Prospective investors should specifically consider the factors identified in this announcement which could cause actual results to differ from those indicated or suggested by the forward looking statements in this announcement before making an investment decision.
Neither this announcement nor any copy of it may be made or transmitted into
The securities to which this announcement relates have not been, and will not be, registered under the Securities Act or with any regulatory authority or under any applicable securities laws of any state or other jurisdiction of
The securities referred to herein have not been and will not be registered under the applicable securities laws of
No representation or warranty, express or implied, is made by the Company or the Joint Brokers as to any of the contents of this announcement, including its accuracy, completeness or for any other statement made or purported to be made by it or on behalf of it, the Company, the Directors or any other person, in connection with the Placing, the Open Offer and Admission and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future (without limiting the statutory rights of any person to whom this announcement is issued). The Joint Brokers do not accept any liability whatsoever for the accuracy of any information or opinions contained in this announcement or for the omission of any material information from this announcement for which the Company and the Directors are solely responsible.
The Company has today announced a Placing to raise approximately
In addition, in order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of new Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Issue Price for an aggregate of up to 1,835,578 Open
1 Open Offer Share for every 90 Existing Ordinary Shares
held on the Record Date, at
Neither the Placing nor Open Offer are required to be voted on by Shareholders since the Company is able to utilise its existing authorities and disapplication of pre-emption rights, granted at the most recent annual general meeting, to issue the Placing Shares and the Open
First Admission is expected to occur at
Second Admission is expected to occur at
The Placing and the Open Offer are not underwritten. The Open Offer is conditional on the First Admission of the Placing Shares having occurred.
The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the New Ordinary Shares whilst providing the Company with additional capital to invest in the business of the Group.
The Issue Price represents a discount of approximately 5.6 per cent. to the closing middle market price of
Background to and reasons for the Fundraising
Equals is a profitable, high growth e-banking and international payments specialist. The Company's products are designed to enable personal and business customers to make easy, low-cost payments both domestically and in a broad range of currencies via one integrated system.
Since its admission to AIM in 2014, the Company has achieved substantial growth both organically and through acquisition, supported by the purchase of CardOne Banking in
Products and marketing
During the past few years, the Company has focused on expanding and enhancing its product range and functionality to drive growth. Equals currently offers an extensive range of payments and banking services through six product categories; International Payments, Current Accounts, Travel Cash, Business Expenses, Loans* and Currency Cards. The Directors believe that Equals now has bank level functionality and can offer a wider range of services to its clients than many of its competitors in the payments services markets.
Equals continues to invest in this suite of products with the aim of increasing operational efficiency, improving customer experience and introducing new products. Marketing spend has been increased to accelerate growth and brand awareness of its products and to drive performance channels and deepen partner relationships. The Company is also intending to increase its marketing efforts in the US, where Equals has recently obtained a license to trade via its relationship with
*loans intended to be introduced in Q3 through the Company's credit broker license
In addition to product development, the Company's strategy is to continue to focus on rationalising its supply chain to create further operational efficiencies, minimise cost and create margin expansion. Equals has secured numerous commercial agreements and supply chain integrations that create a barrier to entry, including with:
· Faster Payments - enables rapid settlement of transactions;
· Mastercard - enables accelerated roll out of self-issuance of cards;
A key component of Company's strategy to date has been to acquire complementary businesses to add scale and improve products, as evidenced by the strong track record of acquisitions: CardOne,
Use of the proceeds of the Placing and Open Offer
Continuing its strategy, and focusing on the growth drivers detailed above, the Company is proceeding with the Fundraising to provide growth working capital, to fund future bolt-on acquisition opportunities and to accelerate its corporate offering. Specifically, the Group intends to divide the net cash proceeds of the Placing and Open Offer, expected to be up to
Growth working capital
In order to accelerate supply chain rationalisation, Equals would benefit from more collateral to fund both the expansion of its corporate international payments business and also its card-based businesses.
For international payments, collateral is required to be placed with liquidity-providing banks such as Barclays, RBS and now
Market consolidation through acquisition
Equals has a strong track-record of completing and integrating acquisitions, particularly within International Payments. Several bolt-on acquisition opportunities have been identified with third parties with whom the Company is engaged in discussions. These are typically smaller FX businesses which may be struggling due to an increasing regulatory burden and limited access to liquidity given the relative lack of scale. For example, the Company recently acquired the international Payments business of HermexFX, part of the
The Directors anticipate transaction values associated with these targets of between
Accelerate corporate offering
Equals has identified a significant growth opportunity with its corporate range of products (Equals Spend, Equals Cash, Equals Pay and Equals Account), which together accounted for approximately 37 per cent. of Group revenues in FY 2018.
The Company's Business Expenses product (Equals Spend) enables small and medium sized businesses (SMEs) to have greater control, transparency and cost savings over their employee and other business expenses via prepaid cards and online accounts. Whilst Equals Spend achieved solid growth of 35 per cent. during FY2018, it currently represents only 12 per cent. of the Group's total revenue. The Directors believe that there is significant opportunity to grow the Equals Spend business within the
Equals is seeing strong take-up for Equals Spend by SMEs. The Company intends to spend approximately
Current trading and prospects
Following this update, on
The Directors are confident that, since the announcement of the above notifications, trading has remained strong and the Company has continued to trade in line with market expectations.
Details of the Placing and the Open Offer
The Company will raise a total of
The Placing is conditional on First Admission occurring no later than
The Company is proposing to raise up to a further
The Open Offer provides Qualifying Holders with the opportunity to apply to acquire Open
1 Open Offer Share for every 90 Existing Ordinary Shares
and so on in proportion to any other number of Existing Ordinary Shares then held.
Entitlements to apply to acquire Open
Qualifying Shareholders who do not take up their Basic Entitlements in full will experience a dilution to their interests of approximately 8.8 per cent. following Second Admission (assuming full subscription under the Placing and Open Offer). Qualifying Shareholders who take up their Basic Entitlements in full will experience a dilution to their interests of 7.6 per cent. on the same basis.
Qualifying Shareholders should note that the Open
The Open Offer is subject to the satisfaction, inter alia, of the following conditions on or before
· the Placing becoming unconditional in all respects;
· Second Admission becoming effective by
· the Placing Agreement becoming unconditional in relation to the Open Offer.
The Open Offer is structured to allow Qualifying Shareholders to subscribe for Open
Qualifying Shareholders may also make applications in excess of their Basic Entitlements. To the extent that Basic Entitlements are not subscribed by Qualifying Shareholders, such Open
However, excess applications will be rejected if and to the extent that acceptance would result in the Qualifying Shareholder, together with those acting in concert with him/her/it for the purposes of the City Code, holding 30 per cent. or more of the Enlarged Share Capital immediately following Second Admission.
Those Placees who are Qualifying Shareholders will also be entitled to participate in the Open Offer.
Settlement and dealings
Applications will be made to the
It is expected that Second Admission will become effective and that dealings in the Open Offer Shares will commence at
Pursuant to the Placing Agreement, the Joint Brokers have agreed to use their reasonable endeavours as agent of the Company to procure subscribers for the Placing Shares.
The Placing Agreement provides, inter alia, for payment by the Company to the Joint Brokers of commissions based on certain percentages of the product of the number of Placing Shares placed by them multiplied by the Issue Price.
The Company will bear all other expenses of and incidental to the Placing, including the fees of the
The Placing Agreement contains certain warranties and indemnities from the Company in favour of the Joint Brokers and the obligations of the Joint Brokers under the Placing Agreement in connection with the Placing and Open Offer are conditional, inter alia, upon:
(a) the Placing Agreement having become unconditional in all respects (save for the condition relating to First Admission) and not having been terminated in accordance with its terms prior to First Admission;
(b) First Admission becoming effective not later than
(c) the Placing Agreement becoming unconditional in relation to the Open Offer.
The Joint Brokers may terminate the Placing Agreement in certain circumstances, if, inter alia, the Company has failed to comply with any of its obligations under the Placing Agreement; if there is a material adverse change in the financial or trading position or prospects of the Company or the Group; or if there is a change in financial, political, economic or stock market conditions, which in their reasonable opinion (acting in good faith) is or would be materially prejudicial to the successful outcome of the Placing.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Placing and Open Offer
Expected date for First Admission and commencement of dealings in the Placing Shares
Expected date for Placing Shares to be credited to CREST stock accounts
Expected date for despatch of definitive share certificates for Placing Shares
Open Offer Timetable
Record Date for the Open Offer
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Market Cap: £87.52 m
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