The City Of London Group (COLG) has received commitments to raise £15.2m in new funds to support the development of its SME lending business.

COLG’s subsidiary Recognise will also continue to progress its UK banking licence application.

The capital raising is being effected through a combination of the issue to certain new and existing shareholders of, in aggregate, 10,520,000 new ordinary shares of £0.02 each in COLG.

This is at an issue price of 125p per share to raise gross subscription proceeds of £13.1m, and the issue of £2m of unlisted unsecured convertible loan notes. The aggregate gross subscription proceeds of the issue of the shares and the convertible loan notes is £15.2m.

Max Barney Investments Limited, parties acting in concert with it, and DV4 Limited, all of whom are existing shareholders in COLG, have each provided firm commitments to subscribe for a total of 4m new shares as part of the capital raising.

Michael Goldstein, chief executive officer of the City of London Group, said: “We are delighted with the support shown by existing and new shareholders for our strategy. Today’s announcement and the commitments to raise in excess of £15 million reflects confidence in the team and the strategy that we have laid down for creating an organisation that is positioned to meet the needs of the SME market. We continue to see a clear path for generating shareholder value.”

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COLG’s has offered leasing products as part of its proposed lending business, led by former Metro director Jason Oakley, since February 2018. COLG applied for its banking licence in December 2017, with the application still in process.

Echo Financial Services, a West Midlands-registered company became the challenger bank, providing loans and leases to businesses, funded by retail deposits.

The team for the bank currently includes Oakley, formerly managing director for commercial banking at Metro and Bryce Glover, coming from commercial banking roles in Santander and Nationwide.