LCG to raise £17.5m to fund international expansion & new products

Spread betting and CFD provider London Capital Group (LCG) has announced that it intends to raise up to £17.5m through a proposed financing, following which Charles-Henri Sabet will take over as executive chairman of the company.

The financing will comprise between £12.5m and £15.0m from investment company GLIO Holdings Limited, which is chaired by Sabet, who is a leading investor in online trading platforms. Institutional investors will also contribute between £0.5m and £2.5m.

“This is an exciting development for the London Capital Group,” said CEO Kevin Ashby. “The additional funds and the involvement of Charles-Henri Sabet will enable the business to accelerate our strategy of introducing new products and growing internationally.”

Earlier this year, LCG’s board adopted a three-stage strategy to return the company to growth. The first stage has been completed with the successful migration of the group's IT platform.

LCG believes that product innovation is the primary route to differentiating the company from its competitors, and that it should focus its efforts on creating and promoting new products utilising viral marketing, PR and online campaigns to attract new clients at a reduced cost.

To further support the company's growth, the board also intends to develop business channels in less mature markets, attracting new clients and reducing the group's current dependence on the UK market.

The board warned however that despite being well capitalised, the company faced “considerable risks” in being able to deliver on its growth plan and will be “reliant on growing in a static UK market, trading conditions improving from their current level and being able to deliver innovative products that appeal to the trading community.”

LCG said that the board was introduced to Sabet last year by CEO Ashby as a potential non-executive director. He has successful investor in online trading platforms, founding Sythesis Bank in 1999 which was later sold to Saxo Bank in 2007.

According to LCG, Sabet spent a considerable amount of time getting to know the company's business, understanding the group and the board's longer-term growth strategy, following which it was proposed that he become more involved in the day-to-day running of the company. He also recognised that the execution ability of the company could be enhanced and accelerated with new capital, improved technology and improved access to institutional and global markets.

Sabet's connections identified a group of individuals who he believed could help deliver the capital and technology that the company needed to execute its growth plan and created GLIO as a vehicle through which their contribution could be channelled.

The net proceeds of the financing will be made immediately available to LCG without limitation to fund the company’s regulatory capital requirements.

“Whilst the capital injection is very attractive to the Group, the board further believes that the additional technological capability and market access that GLIO brings will have a significant impact on the prospects for the company in the short and medium term,” said LCG in a statement.

Following completion of the financing, to be proposed to shareholders at a General Meeting on July 3rd, Sabet will be appointed to the LCG board and will take over as executive chairman, replacing Giles Vardey who will step down but remain as a non-executive director.

The company added that it is in initial discussions with Algoweb S.A.R.L, a company in which Sabet currently has an interest, in connection with the possible licensing to LCG of a straight-through processing (STP) trading solution.

Shares in London Capital Group Holdings plc (Co. Data) (AIM:LCG) slumped 8.74 per cent to a new 52-week low of 23.40 pence per share in London earlier Wednesday. The company’s shares are down 37.75 per cent in the past year.