Companies: ATL    GWP    HCL    ITA   

Mike Foster talks to the shell supremo

Adrian Bradshaw, co-founder of Bradmount Investments, is doing his best to pull in deals amidst uncertainty. So far this year he has backed three growth company floats, at a time when certain financiers have been struggling to keep just one alive.

But even Bradshaw concedes that financial markets gummed up in September: 'Everyone's talking about the war. We recently had a good, debt free, retail company which wanted to come to market, but no-one would pay even nine times earnings'.

Bradmount, which has done two dozen deals in six years, is renowned for reversing companies into quoted shells. Not all the deals have gone according to plan. Honeysuckle Leisure is struggling while Comprehensive Business Services is due to sell its flailing business.

But Bradshaw is still bouncing away. Aged 44, he trained as a lawyer, but soon decided a job in the City would be more exciting. He started off as a private client broker with Vickers da Costa, then secured stints at Bell Lawrie and County Nat West.

In the early 1980s, Bradshaw worked happily for Guidehouse Securities. But he later disagreed with the firm's diversification strategy, and jumped ship to become head of corporate finance at Arbuthnot Latham in 1989, at the age of 32.

Sadly, Arbuthnot's owner, General Accident, sold its banking division to a third party rather than accepting a Bradshaw-led buy-out. A disgusted Bradshaw became chief executive of marketing minnow MMI, whose value was just £2.2 million.

MMI, renamed Incepta, became a fully fledged financial public relations animal, via its purchase of Citigate. Bradshaw left Incepta, which continued on an aggressive, acquisition-led expansion trial. It is now valued at £120 million. 'I've still got shares in Incepta', says Bradshaw. 'I should have sold. But, unlike Railtrack, I'm great believer in financial pr'.

After all these false starts, Bradshaw decided to do his own thing in 1995. He set up Bradmount Investments with Peter Mountford, aged 43, who used to work at Arthur Andersen. 'There's just the two of us. I don't see any point in dealing with other investment banking egos'.

Bradmount does not advise companies in a formal sense: 'We aren't interested in getting involved in bidding wars to secure advisory positions. We set out to become principal investors in growth companies; set up good structures for them, and go on their boards'.

Quoted shells raise finance for companies quickly and effectively, says Bradshaw.

Earlier this year, there was a flurry of interest in health stocks, and Bradmount helped GW Pharmaceuticals, developer of cannabis-based medicines, to raise £25 million: 'We were looking for £15 million and could have raised £90 million. But we didn't want to be greedy'.

Bradmount pushed Health Media into Internet Direct around the same time: 'We'd tried to do an internet deal that made sense during the tech boom, but couldn't find one, and that was just as well', says Bradshaw.

This year Bradmount created a new shell company called Atlantic Global, into which software company Atlantic EC was reversed. As a result, Atlantic's management raised funds quickly and secured a decent equity incentive structure.

'The name of the game's changed with shells', says Bradshaw. 'You're now allowed to create a cash shell, provided you stipulate its sector. That's often better than reversing into a company where you have to pay off incumbents'.

Bradshaw says Bradmount does not collect fat fees from companies on minute one: 'I've seen situations where promoters have been allowed to buy shares at 0.1p and get them floated at 10p'.

Instead, Bradmount takes equity warrants which can only be exercised if client share prices rise substantially. At Atlantic Global, Bradshaw and Mountford will secure 12 per cent of the company when its shares achieve a 15 per cent premium to its 25p float price. Bradshaw wants to help the company perform as a non-executive director: 'The shares need to get to a premium better than 25 per cent before we can start to consider cashing some in'.

Companies have often struck deals with Bradmount to take advantage of their networking skills: 'We know other investors and entrepreneurs', says Bradshaw. 'We were able to introduce Sandy Anderson to Honeycombe Leisure, for example'.

Small company shares are currently underperforming. Atlantic Global's are currently trading marginally below their float price: 'I'm frustrated about the way fund managers have punished smaller company shares. But we're making money from earlier deals, and we like the results our companies are producing', Bradshaw says.