Cash rich

Securing investment in the current climate is not an easy prospect, compared to one year ago when asking a bank to lend you £7m was a much simpler task. Listed firms have seen the value of their stock fall during the credit crunch and when an investor comes along waving £50 notes, as in the case of Cobra, the opportunity becomes too good to resist. Some may call it a risk, but according to Cobra it is a deal that will enable them to control their own destiny.

Cobra listed on the London Stock Exchange in July 2007 and has had growing ambitions ever since. The business, which revolves around its broker network, has been involved in takeover talks in the past but rebuffed the approaches.

However its stagnant performance on the stock exchange and disappointing profits has seen the company turn to investment firm Wainford. This latest fund raising scheme allows Cobra to draw on a £7m loan facility which will enable it to wipe out its existing debts and concentrate on integrating its current businesses.

But a loan is a loan and each of Cobra’s 280 Loan Notes, worth £25,000 are to be paid back within two years with interest of 12.5% or Dominic Wainford has the option to turn them in to Cobra shares. Either way, Cobra says it is a win win situation. Wainford currently has a 6% shareholding in Cobra and if he were to snap up all of the £7m loan in shares, it would see his holding increase to 29%.

Added with an admission that private equity backing could also be an option in the future, Cobra could well have some cash rich investors on its board. The insurance sector has seen its fair share of private equity investment in recent times and with a hard market predicted to arrive sooner rather than later it is no surprise that firms such as Cobra are not ruling out that channel.