Skandia and Friends Provident are injecting a total of £1.65m into Cavanagh Group as the listed IFA strives for profitability after a £1m loss for the six months to April 30.
Friends is paying £1m and Skandia the balance for newly-issued shares in the IFA which, despite boosting turnover from £2.4m to £4.9m during the first half of the year, saw pre-tax losses rocket from £70,000 to £1.08m. It blames the rise on the cost of integrating new acquisition Ernst & Young Financial Manage-ment, which it bought last December in a £3m deal.
Friends says the move fits its strategy of taking stakes in “good quality” IFAs, having already invested in firms such as Sesame, Millfield, Lighthouse and Berkeley Berry Birch. It says it was happy to see Cavanagh acquire E&Y and believes the combined business is capable of growing strongly although it admits the stake in the firm could be one of the last it takes.
Director, UK distribution Simon Clamp says: “We have an open mind on making further investments but we have a strict criteria. Cavanagh has a very interesting business model but there are not many opportunities left out there.”
Cavanagh managing director Simon Redgrove says: “It is greatly encouraging that major life companies believe in our plans and development as much as we do.”
Cavanagh results, p11