Google news alerts are excellent. Today up popped news of a company which I have mentioned before, Merchant House Group.
As a quick recap, Merchant House Group (MHG) was described in one Investor Briefing in January 2012 as being “well advanced in the process of transformation from an unprofitable small corporate finance house specialising in the currently moribund niche of fund-raising on AIM and PLUS markets into a profitable financial services group focussed on investment products for the UK retail market.”
It is stated, “We particularly note new management has made some excellent deals with administrators of insolvent companies.”
The biggest shareholder in MHG is Liberty Capital, holding just over 18% of the shares. This is the same Liberty Capital incorporated in the British Virgin Islands and of which Mr Craig Whyte has stated he is 100% owner.
The chairman of MHG is James Holmes, with whom Mr Whyte has had various business dealings in recent years, being directors of various companies together.
On 29th June 2012, MHG announced that its nominated advisers had resigned. As the release stated:-
“Cairn Financial Advisers LLP (“Cairn”), the Company’s incumbent nominated adviser, has agreed to remain in situ until the earlier of the appointment of a new nominated adviser and 31 July 2012.
In the event that the Company does not appoint a new nominated adviser by 31 July 2012 and if trading in the Company’s shares has resumed by that date, trading in the Company’s shares will be suspended with effect from 1 August 2012.
In accordance with AIM Rule 1, if the Company fails to appoint a new nominated adviser within one month from the effective date of Cairn’s resignation, the admission of the Company’s securities to trading on AIM will be cancelled.”
However, all is well and we need not fear suspension of the shares in MHG (because trading in the shares is suspended already!).
“The directors are pleased to confirm the appointment of Allenby Capital Limited as the Company’s Nominated Adviser and Broker with immediate effect.
Further to the announcement of 26 June, the audit of the annual accounts for the financial year ending 31 December 2011 continues although the late start due to the challenges in the business previously reported means that the annual report is now expected to be published in the second half of August. The directors anticipate that when the annual accounts have been published, the suspension of trading on AIM in the Company’s ordinary shares will be lifted. Combined with the fundraising, appointing a new custodian and a strengthened board already announced, this will successfully conclude the short-term goals following a challenging six months. The whole team has worked hard in difficult circumstances to reach this point.”
Late accounts? Sounds very familiar to those who followed the history of Mr Whyte’s companies…
Why does Allenby Capital, the new adviser, sound familiar?
In March 2011 there was a feature published in Growth Company Investor, profiling Imran Ahmad.
As the article says:-
“Straight talking Imran Ahmad is the founder and chief executive of Allenby Capital, a fast growing broker based in Mayfair.
The business is the brainchild of Imran Ahmad and though only founded in 2009 it already has 31 clients on the roster and is now ranked 14th in the latest Hemscott rankings.
Allenby was established with £200,000 provided by Ahmad, who still retains a majority 80 per cent interest.
Business is brisk, with Ahmad pitching to up to ten businesses a month. Many of these are public companies that are being sidelined by larger brokers as they move upscale – a fertile trading ground for Allenby. He says ‘liquidity is key and there will always be money out there if the deal is right.’ Ahmad believes the institutional appetite for sub £100 million market cap companies will never be what it was – instead you have to be smarter to access capital.
A point not lost on his Mayfair base where he has tapped into several family offices – home to untold hoards of cash. On the Allenby website it states that clients seeking up to £30 million should get in touch. Recent deals include a £6 million fundraising for Urals Energy, an oil company in Russia, and Allenby was sub agent on the recent £11 million fundraising for Niche, the vehicle of mining deal entrepreneur John McKeon. However, Allenby was also the lead broker on Atlantic Coal, which recently raised £12 million, and Ahmad is confident a £20 million fundraising will not be far away. Another client, AFC Energy, has been a soaraway success and Ahmad also likes cloud computing minnow Nasstar.
Ahmad is a consummate networker, tending to attract new business from lawyers, accountants and financial public relations firms. Future potential deals include a filtration membranes business that turns stagnant water to that which is safe to drink. Emerging markets also appear to be an increasing theme as AIM continues to attract overseas players. To this end he has had interest from a China-based oil and chemical tankers business.
Allenby is profitable and growth in the short term will be organic – next on the list is the recruitment of a resources analyst. Further out he might be interested in acquiring a straight agency private client broker. Though Allenby has no FSA permissions to hold client money, this avenue could provide a solution as well as offering access to wealthy individuals.”
Allenby Capital advised Nova Resources Limited, where Mr Green was Chairman till his resignation “to pursue other interests”.
Mr Ahmad moved on from Allenby to Zeus Capital last year, and is now a director of the Rangers Football Club Ltd.
“During Mr Ahmad’s time at Allenby Capital Limited, the firm acted and still is broker for The Weather Lottery, which provided Rangers with online betting and lotto services in 2010. It ended up in a court dispute with the Ibrox club claiming the Doncaster gambling business owed it £30,000 in unpaid profits.
Two employees of the Weather Lottery were convicted of fraud last November, which was highlighted in annual results as one of the contributing factors towards the company’s loss of £789,000 reported until July 2011.”
Even though Mr Ahmad left Allenby Capital in September 2011, records at Duedil.com indicate he is still the 80% shareholder. This might simply be a delay in records being updated, as the Rangers website indicates that he sold his stake in September 2011.
There are only seventy listed Nominated Advisers in London.
It can therefore be nothing other than coincidence that a company in which the largest shareholder is a company owned by Craig Whyte has taken on as Nominated Adviser a company closely connected to a director of Rangers.
Sadly such a connection will have those Rangers FC supporters anxious that Mr Whyte will re-appear in some guise or other concerned by the apparent close connection.
It is merely a matter of statistical chance of course. Bearing in mind that there are seventy Nominated Advisers in London, MHG were sure to end up with one with a Rangers connection sooner or later…
Posted by Paul McConville