Gordon Dadds Group (GOR) , the London-based legal and professional services business, has announced plans to raise a minimum of £10m by way of an accelerated bookbuild. The funds are to be used to continue the group’s acquisition strategy in the legal services sector, which has proven to be very lucrative.
When the firm was listed in August 2017, the objective was to double revenues in 3 years. It has managed to triple revenues in 18 months.
Interestingly, £20m was raised when it was admitted to AIM, with £14m of those funds allocated to acquisitions, it has so far it managed to successfully acquire £43m of revenues.
The strategy has been focused on acquiring firms with £10m or more of fee income with complementary international business. It is currently targeting businesses in Malta, Gibraltar, South Africa, China, Hong Kong and Bermuda: all to complement the international network the firm is building.
Arden Partners (ARDN) is to be the sole bookrunner for the placing at a minimum price of 140p to be sold to institutional investors. However, the minimum price represents a 25.9% discount to the mid-market price of 189p a share on the day before the announcement.
Assuming £10m is raised at the minimum price, the new shares (ranked pari passu) will represent 24.8% of issued share capital of Gordon Dadds, which will commence trading on AIM on 12 February 2019.
Shares in Gordon Dadds were trading at 147p following the announcement, representing a slight premium to the offered placing price, indicating the confidence the market has in the strategy thus far.
The international network and its deep sector specialisms allow for a larger breadth and quality of product offerings to the clients, the company said. The success is driven largely by the increased opportunity for cross selling within the firm following the acquisitions.
Furthermore, the acquisitions give the Group operating synergies through the merging of London offices, as well as £3m of annual savings by migrating accounting and non-productive functions, and £2m of annual savings by vacating certain offices.
The Group said it is targeting gross margins of 50%, overheads of 30% or less, and net profits before tax of 15% of earnings as pre-tax profits to shareholders.
The company said that the placing will allow it to continue and take “swift advantage of opportunities in legal and professional services sectors”.
An accelerated bookbuild is usually done because it offers flexible and quick access to capital, the raised cash will allow the Group to continue to execute and move quickly on its earnings enhancing acquisitions, which have proven to be highly successful thus far.
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