Channel Islands based GLIF – which owns stakes in a huge range of alternative finance platforms including Platform Black – has updated the market on the progress of its strategic review.
Back at the end of 2015, GLIF shocked many with the news that the then CEO Geoff Miller had left prompting a widespread review of the group’s investment strategy.
Today GLIF updated the stock market on this review.
Crucially the business announced that the interim CEO Andy Whelan has been appointed as the Company's permanent Chief Executive. The businesses executive team now comprises Andy Whelan as Chief Executive Officer, Emma Stubbs as Chief Financial Officer, Marc Krombach as Managing Director, and Louise Beaumont as Head of Public Affairs & Marketing.
In terms of the strategic review GLIF revealed a range of short term priorities including the need to “Clarify and restate the Company's strategic objective” as well “Remove the risks of conflicts of interest”.
With the latter GLIF noted that conflicts of interest has arisen because of two issues: inter-company loans and the relationship between GLI Alternative Finance PLC and GLI. One key change is that in future GLIAF will seek to lend through platforms, and GLI will only lend to platforms. Another key move is to potentially rebrand the fund management business (GLIAM), and establish a distinct board of directors with an independent non-executive chairperson.
The announcement also shed more light on balance sheet developments including the decision to use the proceeds from the sale of £15 million of GLIAF shares as part of an investment by family office Somerston to repay £15 million of the Sancus loan. In a related theme Tech finance specialist BMS revealed that it repaid £3m of a loan made by the Company to BMS and has agreed to pay interest on its remaining loan quarterly to better match the cash flow needs of the Company.
The business also confirmed that it intends to pay a dividend of not less than 2.5p per annum paid quarterly.
Which platforms will stay within the GLIF stable?
According to GLIF two of the core businesses going forward will include Sancus and BMS. Both businesses operate in niche sectors/jurisdictions and have high sustainable margins and strong growth prospects. Sancus has loaned in excess of £150m in the last two years and has offices in four locations; Jersey, Guernsey, Gibraltar and Isle of Man.
BMS made net profit of £1 million in 2015 and is forecasting strong growth. According to the announcement to the stockmarket this morning GLIF “ sees great potential for these businesses in terms of generating free cash flow to service future dividend payments to GLI's ordinary shareholders, with this free cash flow to be paid up to the Company.”
Perhaps most importantly the announcement gives some insight into which platforms GLIF will continue to back after the strategic review. The announcement identified Finexkap,The Credit Junction,LiftForward and Funding Options as having the “ ability to grow significantly”.
Invoice funder and supply chain specialist Platform Black also looks like it will make the grade and remain a core part of the portfolio of platforms. GLIF announced that its stake in the Basingstoke based business would increase to over 80% from 43.9%.
Last but by no means least GLIF looks like it won’t be working as intensively as has in the past with Eastleigh based SME loans specialist Funding Knight. According to GLIF “it has not been possible to agree a way forward where the Company could feel confident in deploying further resources to FundingKnight. An amicable process for separation has been agreed where GLI will remain a passive investor whilst reducing overall financial exposure and seeking a long term exit.”
This announcement gives decent insight into what seems to be a very thorough review. The focus now seems to be on working with a smaller number of platforms, with bigger equity share holdings across this core. That would seem to indicate that a significant number of the long list of GLIF platforms might be for the chop in the not too distant future.