Bluehone Secured Assets, a newly formed company established to provide an alternative source of finance to small and medium enterprises, is to beef up its own finances with a flotation on AIM, the Alternative Investment Market.
The company plans to raise up to £40m through a placing to institutional investors and an offer for subscription that will be available to private investors. At least half the shares available will be held back for private investors.
Bluehone's stated objective is to help to address the funding gap that exists for small businesses in a way that is attractive for both the borrower and investors. The company sees a gap in the market that is not being addressed, at a reasonable rate, by traditional debt providers or the equity markets.
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The Bluehone directors believe that by negotiating secured loans, the returns from the loan portfolio will demonstrate less risk than an equity investment in the same companies and as the downside is protected on each loan, the total returns from the loan portfolio, including warrant appreciation, could outperform an equity portfolio in the same companies.
The intention is to build a loan portfolio comprising 15-20 companies in the first year, and the company is targeting a cash yield of 6% per annum. It says profits will be distributed as capital in a tax efficient manner.
The portfolio adviser to the company is Bluehone Investors LLP. Bluehone was formed in 2005 by Bill Brown and Robert Mitchell who had previously worked together at F&C Asset Management where they were responsible for a number of small company funds including funds specialising in the provision of capital to AIM companies. Brown and Mitchell have worked together since 1995 and during that time have invested into over 250 fund-raising exercises by small companies.
Charles Stanley is acting as Nominated Adviser (Nomad) and broker to the company. Trading in Bluehone shares is expected to start on April 27th.
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