City of London sees strong demand for trade finance business

Investment company City of London Group said its trade finance business continued to experience a strong demand for its services since the start of April, despite the disruption caused by the transition of its banking lines to Macquarie Bank.

By MoneyWeek

published 17 August 2012

in Features

The new facility is now in place and is well-positioned to grow its profitability.

The firm has also seen strong interest in its Therium Capital Management business, with the outlook for further third-party funding looking "very promising". Total third-party funds raised to date are £14.9m.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

The pipeline of legal cases coming to Therium for funding remains strong with over 325 cases reviewed to date, of which around six per cent have been funded. There have been no significant developments on legal cases in this period and as a result no performance fees, but the outlook for the portfolio of cases is "encouraging", the firm said.

City's lock funding facilities have now been increased and the combined book size has reached £7.2m, with margins holding up above expected levels. The new managed account of £10m from Crescendo delivers a step change in the business and further block lines are now expected to become available.

The firm is continuing to sell down selective shares in its listed portfolio and has achieved share sales of approximately £0.6m since April 1st. The proceeds will be used to fund investments in the platforms. The mining, energy and other listed investment portfolio (excluding the Munro Fund and unlisted stocks) is valued at £2.1m as at August 14th.

Eric Anstee, Chief Executive Officer, said: "The activity in this period clearly demonstrates increased momentum on third party funding for our platforms despite the challenging economic conditions. Each of our platforms is moving towards critical mass and this has laid the foundation for future growth.

"The disposal of FX Capital Group, when completed, at over 2.5 times our original cost is the proof that significant value creation can arise from early stage investments in financial services.

"We are continuing to look to reduce our holdings in our other investments to re-deploy the capital in line with our strategy."

The share price rose 3.95% to 79p by 09:03.

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.