23/11/2005
Shares in Davenham, an asset-based lender to small and medium-sized companies, rose to a slight premium of 3% on the first day of trading. The company has raised £23.5m net to help fund further growth of the business, both organically and by making acquisitions.
At present Davenham is based in the North-West and has plans to move into other regions. Chief executive David Coates aims to make one acquisition in the coming year ‘of up to £10m’. This would expand the loan book by £30m. The group, which he believes is filling a gap traditionally occupied by branch bank managers but now vacated by the major clearers, has experienced strong growth in the past two years, doubling turnover to £28.5m for the year to June. This has been achieved despite the loan portfolio only rising by 62% to £151m during this period.
Profits, before tax and interest from mezzanine debt (since repaid), rose by a similar amount to £9.3m. Davenham will lend up to £3m to companies through three divisions: property, trade and asset finance. The group has over 2,400 clients across many sectors. Small housebuilders, importers and distributors are typical customers. The group’s loans charge an effective APR of 18%. But bad debts are only 1.5% of loans.
Coates has a strong background, with experience at Royal Bank of Scotland, Standard Chartered and credit agency Experian, and is ambitious to grow the group further. A raft of institutions has supported the float, possibly drawn by Davenham’s promise to pay a 5% dividend this year. Private investors should consider joining them as well.
| Market cap: | £67.0m |
| PE Forecast: | n/a |
| Share price: | 261.5p |
| AIM | £3.13m |
12.00p
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| Other company articles: |
| 03/11/2008 |
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