Chief exec Alway plays down outstanding debts to brokers
Jelf will compete for acquisitions with the likes of Towergate and Giles once again after securing fresh private equity investment.
New York firm Cap Z, which owns a 43% stake after buying out previous backer 3i, says it is prepared to provide the consolidator with fresh funding over the next few years. Cap Z formerly backed SBJ before selling to AXA.
Cap Z partner Jonathan Kelly said: “If required, Cap Z is quite prepared to fund acquisitions and is happy to back the management. It is worth noting that we were not the only institutional investor. The market backs the Jelf management team.”
The West Country-based outfit will initially rely on a £19m share placement, of which Cap Z takes just over half, and the rest will be hoovered up by institutions.
Jelf chief executive Alex Alway said the cash would be used to reduce debt, invest in its new 15,000 square foot offices in Manchester, and fund acquisitions.
Alway said: “We deliberately stayed out of the market because of the pricing of acquisitions, but like all the bigger players, we get approached from time to time. We will probably take a harder look at it towards the late end of the summer.”
Alway remained relaxed about payments to brokers bought out in the boom years. “While there were some high numbers reported, what has escaped most observers is that there was quite a lot of gearing of those, subject to performance, so when we hit the recession those earnouts were not as expensive as previously predicted,” he said.
Alway was speaking as Jelf posted an operating loss of £9.7m. A total of £4.8m was trimmed off the balance sheet from restructuring and £7.5m from goodwill writedowns.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was £8.1m compared to a previous £10.1m in 2008. Revenue increased from £63.1m to £70.3m, as previous acquisitions ploughed fresh turnover into the firm.
The group’s wealth management business took the biggest hit from the recession, with EBITDA decreasing by 134% and losing the business £190,000.
Revenue from its network, The Jelf Partnership, increased by 78% to £300,000 in its second year of operation.
Chairman David Walker said: “We are cautiously optimistic about 2010, and very optimistic about the long-term future of the group.”