- London brokerage adds to existing Midlands business
- Big cross-selling possibilities across the group
- Deal seen boosting earnings immediately
Business advisory group Begbies Traynor (BEG:AIM) cemented its expansion into property finance with its latest acquisition, which it expects to add to earnings from day one.
The purchase of Mantra Capital, a London-based finance and insurance brokerage regulated by the FCA (Financial Conduct Authority), complements last year’s acquisition of MAF Finance to form a national brokerage business.
GROWTH AMBITIONS
Begbies has made a series of savvy acquisitions in the last two years in anticipation of an increase in demand for business advice and insolvency services as the economy cools.
Midlands-based MAF was snapped up in May 2021 for an initial outlay of just £3 million with an earn-out clause of up to £8.75 million based on some fairly punchy profit targets.
Prior to that, the firm raised £22 million through an oversubscribed placing of new shares to buy out insolvency firm David Rubin & Partners for an initial consideration of £12 million and a similar amount in earn-out clauses.
Today’s deal consists of an initial payment of £4.5 million and a potential earn-out in cash and shares of up to £13.5 million based on the profits generated over the next four years.
Mantra specializes in commercial and residential real estate lending, providing property investment and development finance and insurance brokerage services.
In the past year the firm raised more than £500 million in financing for its clients from a large panel of banks and specialist lenders.
CROSS-SELLING BENEFITS
Mantra and MAF will form BTG Funding Solutions, a brokerage with around 70 staff generating roughly £8 million in annual fee income and arranged finance of more than £800 million over the past year.
BTG will market its services directly to the corporate community and also through the group's existing, extensive referral network of accountants and other professionals, hopefully benefitting from a ‘network effect’ as it leverages the group’s existing relationships.
‘We believe access to finance will be critical as the economy addresses its current challenges’, said chief executive Ric Traynor.
‘BTG Funding Solutions will be a major addition to the support and advice we can provide, whilst enhancing our long-term organic growth prospects’, he added.
Shares in Begbies added 1% to 143.3p.
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