(Sharecast News) – Broker and wealth manager WH Ireland tanked on Friday after a heavily discounted share placing in which it raised £5m, as it warned it will likely remain loss-making until at least November.
The company placed just over 166.6m shares with institutional and other investors at 3p each, which is a discount of 87% to the closing share price on Thursday.
Explaining its decision to carry out the placing, WH Ireland said that in the three months to the end of June, it made a pre-tax loss of £1.1m on revenues of around £5.6m.
“The loss in the period is as a result of the widely reported multi-year low level of transactional activity in the financial capital markets that has impacted the group’s Capital Markets division (CM), alongside a reduction in assets under management (AUM) for the group’s Wealth Management division (WM), in part due to weaker market conditions impacting client portfolio size,” it said.
“With market conditions remaining challenging, including transactional activity in the CM division being typically at seasonally lower levels during the summer months, the directors do not believe that there will be an improvement in CM transactional activity during the current quarter nor do the directors believe there will be an uplift in AUM within the WM division over the same period. The directors therefore believe the group will remain loss making until at least November 2023.”
WH Ireland said that before the placing, it had been in talks with the Financial Conduct Authority about a potential solvent wind down. The broker noted that its current regulatory capital position is around £1.9m below the FCA’s regulatory capital requirement.
At 1300 BST, the shares were down 63% at 8.40p.