Ellis seeks to raise £4m for expansion funding

The Broker Network has announced plans to raise £4m by issuing new shares and floating on the Alternative Investment Market (AIM).

Chief executive Grant Ellis said that after the float, the business would have a market capitalisation of £16m.

Venture capitalist Capricorn Ventures International currently owns around 38% of the Broker Network, but Ellis denied that the float was driven by Capricorn's desire to exit the business.

Ellis said: "I think it's fair to say that Capricorn is planning to decrease its stake." But he said Capricorn would retain a shareholding in the business.

The majority of the remaining shares are owned by network founders Ellis, Peter Bates and David Belgian.

Ellis said all three intended to retain significant stakes in the business, but an additional £4m would be raised through current shareholders selling down.

Ellis said the fundraising was being undertaken in order to give the Broker Network funds to acquire the businesses of network members who wish to sell.

He said that so far in 2004, the company had acquired the businesses of four retiring members and was in talks with eight others.

The Broker Network is planning to increase its membership to more than 200 brokers by the end of 2008, but Ellis said that of its current 130 members, 73% had owners who were over the age of 50.

"We expect that over the next five years probably around 50% of our members would look to sell.

"We will buy the majority of those businesses," he said.

Ellis said that the offer was being marketed primarily to institutional investors and shares should begin trading towards the end of April.