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May 1, 2008updated 12 Apr 2017 4:45pm

General Capital below book value despite doubling in size

If investor sentiment had not been beaten down by the global financial turmoil, General Capital Plc would probably have enjoyed some stock price gains after posting a strong set of 2007 results

By Maryann Tan

If investor sentiment had not been beaten down by the global financial turmoil, General Capital Plc would probably have enjoyed some stock price gains after posting a strong set of 2007 results. 

Instead, the AIM-listed SME lender is trading below its book value, despite doubling in size and growing its loan portfolio by 60 per cent. 

Executives of GenCap have been quick to manage expectations, citing 2007 as an exceptional year that would be difficult to beat under prevailing conditions. 

“Last year was an exceptionally good year and I think the company needs to be congratulated on achieving that result,” said Steven Hartley, GenCap’s newly appointed chief executive. 

He noted the exceptional profit of £1.1m on one transaction, which helped to multiply net profit by almost six times to £2.5m last year. 

This was its exit from Great Fleet, a recruitment business in which GenCap’s venture finance division had acquired a stake through its structured lending activities. 

Bumped up by the completion of the acquisition of brokerage Norton Folgate, GenCap’s Asset Finance arm turned in revenue of £2.6m, while the quick churn in property lending raised revenue from this division to £2.2m last year. 

Depending on the risk profile of the deals originated by Norton, GenCap may choose to underwrite them itself, otherwise the business is a good source of fee income without the associated risks. 

More importantly, Norton is a first step for GenCap – which remains largely a south eastern business – to expand its geographical reach across England.

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