Caledonian Holdings PLC on Tuesday announced its first investment under its revamped financial services strategy, agreeing to inject £1 million into AlbaCo Ltd, a Scottish challenger bank focused on lending to small and medium-sized enterprises.
The Edinburgh-based property investment and development company will invest £750,000 in cash to acquire 750,000 new shares in AlbaCo, with completion expected in the coming days.
Caledonian also plans to acquire a further 250,000 shares via a share swap, issuing around 5.8 billion new Caledonian shares at a premium to its last closing price.
AlbaCo, which is not yet open to trade pending regulatory approval, is aiming to become Scotland’s first bank dedicated to SMEs. Caledonian said the bank’s focus on customer relationships, regional presence and bespoke technology gives it a competitive edge over larger incumbents.
The proposed share swap constitutes a related party transaction under AIM rules, as Caledonian Executive Director Jim McColl is also a director and major shareholder in AlbaCo. The company said independent directors deemed the deal ‘fair and reasonable’, and a valuation report will be commissioned before any non-cash consideration is issued.
‘The Investment marks what we hope will be the first of a number of dynamic transactions and investments aimed at building Caledonian Holdings into a successful investor in innovative financial and payment services businesses. We thank shareholders old and new for their support,’ said Non-Executive Director Chris Cooke.
AlbaCo reported a post-tax loss of £8.96 million for the year ended February 29, with net assets of £6.31 million. Caledonian expects the award of a full banking licence for AlbaCo is ‘imminent’.
Shares in Caledonian Holdings were down 0.8% at 0.0037 pence in London on Tuesday afternoon.
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