European Wealth has entered into a subscription and underwriting agreement with Mauritian firms Astoria and Kingswood to raise £9.2m in total gross proceeds.
Under the arrangement, Astoria and Kingswood have agreed to acquire 48 million shares at 12.8 pence each for £6.14m. The purchase will offer the two firms a stake of 24.13% each in European Wealth.
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The wealth manager has also unveiled an open offer for shareholders for the remaining 24 million shares with an aim to raise another £3.07m.
The open offer is unwritten by Astoria and Kingswood and if shareholders decline the offer, the stakes of the pair in European Wealth could increase to 36.2% each.
“The Board has explored a number of options and believes that the Fundraising is the best option available to the Group to re-capitalise its balance sheet and build a strong platform from which to pursue its stated strategy more effectively. Through the Subscription, the Board is pleased to have secured the support of two new major shareholders, Kingswood and Astoria. Both support the Group’s vision and intend to play an active role in helping accelerate the development of the business,” European Wealth said in a statement.
Proceeds from the fundraising will be utilised to pay off the debt of European Wealth, which includes sums owing under the Kingswood Bridge Facility and £1.14m associated with purchases made in the past.
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By GlobalDataEuropean Wealth said that the fundraising will make it debt free and will offer working capital to help it pursue its goal.
“The Board believes that the potential value creation for the medium to long term benefit of Shareholders arising from the Fundraising outweighs the dilutive effects of the Subscription,” European Wealth added.
