An investor in early stage financial services companies, B.P. Marsh (BPM:AIM) has a stellar record and should soon have greater firepower thanks to a forthcoming fundraising which should provide an extra £17m for the business to grow.

The company’s recent results show a 24.1% increase in net asset value to £98.4m for its year ending 31 January. The value of the portfolio increased by 31.3% driven by its holdings in financial advisory firm LEBC, insurance company Nexus Underwriting and Lloyd’s broker CBC.

During 2017 B.P. Marsh increased its stake in LEBC to 60.9% with a purchase of a further 17.8% holding in the company for £7.1m. B.P. Marsh recently said the company is trading significantly ahead of last year. LEBC also acquired Bristol-based advisory firm Aspira for £5m, aided by a £1.5m loan from B.P. Marsh.

It’s rumoured that LEBC is going to float on the London Stock Exchange next year which could result in an increased valuation of B.P. Marsh’s holding. During the past financial year the company made a 63% paper gain on LEBC with its stake now worth £33.2m.

Savvier investing from B.P. Marsh is indicated by its 17% stake in Nexus which has increased in value by 47.6% in a year to £20.5m.

The company’s small investment in broker CBC demonstrates its expertise; it turned a £4,000 investment into one worth £2.3m in the space of a year.

Australian-listed PSC Insurance is to become a 19.6% shareholder in B.P. Marsh, subject to a share placing completing in July. It is investing £15.5m in the business to expand its UK interests, plus there is an open offer for existing B.P. Marsh investors which could raise up to a further £1.5m.

The new money will allow B.P. Marsh to access different markets and provide additional firepower to invest in companies. The new relationship with PSC also allows chairman Brian Marsh to reduce his 60.7% stake in the company to 44.2%, selling some to the Australian company for £2.9m.

What makes this company slightly different from other investment companies is the level of engagement with those it has invested in. For instance the company’s chief investment officer Dan Topping also sits on the board of Nexus. One of its directors Camilla Kenyon is on the board of LEBC.

While there is some risk that B.P. Marsh may take a while to find more companies in which to invest, the company has demonstrated the expertise to find the winners in its markets so we’re confident it can extend this positive track record. Buy now. (DS)

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