London Capital Group Holding Spins-Off its Brokerage Unit, to be a Privately Held Entity

London Capital Group Ltd.Following the delisting move by London Capital Group Ltd.(LCG) from ‎the London Stock Exchange, its parent London Capital Group Holdings (LCGH) has decided to dispose off the company to a privately owned company. The unit is going to be taken by a private entity controlled by CEO Charles-Henri Sabet in a £4.6 million Loan Notes deal. With the spin-off of its brokerage unit, LCG will be aiming to divest its portfolio with other acquisitions fintech space.

The Board of London Capital Group Holdings along with its wholly-owned subsidiary, Tradex has issued a regulatory statement on the conditional sale of 91.5 percent of London Capital Group Limited. The deal includes a transfer of 100 percent of the issued share capital of each of the LCG Subsidiaries held by LCGH and/or Tradex to SLCG International.

SLCG International is principally controlled by Charles-Henri Sabet and also the Chief Executive Officer. MrSabet along with his investor group GLIO Holdings controls 78.1 percent of the publicly traded parent company London Capital Group Holdings PLC. The proposed transaction to buy the FCA regulated London Capital Group Limited, as well as other subsidiaries of holdings, is executed under the NEX Rules and section 190 of the Act.

In the deal terms, LCGL will see an issue of Loan Notes to Holdings in the amount of £4.6 million, with a coupon interest rate of 8 percent, in return for 91.5 percent of LCG’s Capital. Under the agreement, the Loan notes are perpetual, and the capital is not expected to be repaid,  LCGH will receive an interest stream of approximately £370,000 per annum. The yield is payable in two equal instalments each year on 25th May and 25th November.

And, further Sabet’s SLCG International will keep an option to acquire remaining 8.5 percent of LCG for a consideration of £430,676, to be satisfied by the issue of further loan notes.

LCG has been continued posting operating losses since Mr Sabet took over Holdings more than three years ago. The deal will enable LCG to go private and remove checks and limitations of being owned by a publicly traded company and will be a lot easier to inject capital that would lead the company back into profitability and growth. The last month’s move to delist the share from London Stock Exchange and move it to NEX Exchange was the long-planned approach to reduce complexities and able to meet the effect of the proposed transaction.

The transaction is subject to shareholder approval which is scheduled on March 21st but given that Sabet-controlled GLIO holds 78.1 percent of Holdings, it will just be a formality. Also, it needs to be approved by the FCA, given the change in the ownership and status of the company. 

The company issued an official statement stating: “LCG Holdings may also seek financial services companies that are FCA authorized to carry out regulated business, such as dealing with investments, asset administration and arranging investment deals. Such a deal may require approval from the FCA for a change of control approval,