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Nucleus in £15m cash call

Nucleus is planning a £15m rights issue to pay back the company’s debt to South African insurer Sanlam.

Nucleus founder and chief executive David Ferguson (pictured) says the fundraising has been discussed informally for the last 18 months and has secured large shareholder support.

It is expected to be completed by the end of this year and will be funded by all existing shareholders.

Nucleus sought to raise over £3m in a similar fundraising exercise in June 2009, again to pay back debt to Sanlam.

The IFA-owned wrap currently has 79 IFA member firms with in excess of £1.9bn of client assets held on the platform.

The news comes ahead of the release of Nucleus’ annual results for the year ending December 31, 2009.

Preliminary figures from the accounts show that the wrap provider made an operating loss in 2009 of £1.88m, but saw a 140 per cent increase in turnover to £2.41m.

Ferguson says: “We narrowed our operating loss, while our overall loss grew slightly principally because of the amount of debt we are carrying.

“Nucleus was originally funded by a combination of equity and debt and now is the time to address that with a cash call to shareholders to restructure the balance sheet.”

He adds: “There is very strong shareholder support for the fundraising and that will mean we have a balance sheet completely consistent with the growth ambitions of the business, carrying zero debt and with sufficient working capital to take the business to the next level.”

Ferguson is expecting the company’s turnover to continue to grow for 2010.


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. The platform stories are always glossed up as good news but none of them are making a decent, sustainable return on capital.

    There are too many in the market and at some point there will be problems.

    It won’t be an orderly transistion when one folds and adviser due diligence will be called into question when the clients’ CGT bills start arriving!

  2. So if you do the maths, it needs to double its assets under management just to break even but thats just to service the debt without paying it off.

  3. Anonymous’ CGT point is not correct.
    He/she is not correct either with regard to Nucleus’ business stability. Nucleus’ trading is strong as is its shareholder base of the sort of IFA deliberatey picked to withstand the RDr transition

  4. Don’t think Nucleus “picked” its IFAs – more offered incentives.

    The issue is more generic – the point is when a platform gets into difficulties it won’t be easy for clients and advisers. CGT bills could be triggered and the idea that there will some orderly transition from the loser to another without an almighty IT nightmare is delusional.

    As usual, the adviser will be questioned over the financial due diligencre that has taken place including the level of guarantees in place where the platform is a subsid of a brand name parent i.e there are none!

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