Lioncourt raising £11.23m for new division

Investment house Lioncourt Capital is close to raising £11.23 million (€16.64 million) in equity and mezzanine finance for the development of its new home-building division in the British midlands.

Controlled by financiers David Andrews and Michael Tunney, the firm has hired Goodbody Stockbrokers to raise £2.03 million in new equity from its private clients and loan notes to a value of £7.2 million for the development of Lioncourt Homes.

The providers of the equity will receive an 18.45 per cent stake in the enlarged company for their investment, valuing the business at some £11 million.

The loan notes carry a coupon of 16 per cent. While interest will be rolled up over the seven-year term of the loan, the company retains the right to redeem the loan after two years.

Lioncourt itself will provide £2 million in equity for the fund-raising initiative, which also includes the refinancing of existing loan notes for £3.28 million from other subsidiaries of the group. The holders of those loans will have a stake of some 6.55 per cent in the enlarged company.

"We would hope to complete the fund-raising within the next couple of weeks," said Neil Chandler, finance and commercial director of Lioncourt Homes.

Mr Chandler was formerly deputy group finance director and company secretary of Westbury Group, one of Britain's largest house-builders.

The company's chief executive, Colin Cole, also came from Westbury, where he was an executive director and a divisional chairman.

The company has told prospective investors that it has already spent £20.3 million on the acquisition of 360 development plots at six locations, including Shropshire, north Telford, Gloucester and Stoke-on-Trent.

The company aims to become a significant player in the British construction sector, finishing some 1,000 units per annum within six years while building up a land bank with ongoing supply for two or three years. Company strategy is to source land with and without planning approval. It intends to acquire another 360 plots in the year to March 2008.

Lioncourt is already a big commercial property investor in Britain and Ireland. It has office assets in south-east England, while other investments include food group Jacob Fruitfield, Jarvis hotels in Britain and Usit Travel.