K3 to raise £30.5m and buy Randd

29 June 2020

(Sharecast News) - K3 Capital is raising as much as £30.5m partly to fund the purchase of Randd, which secures research and development tax credits for businesses, for up to £16.8m.
The company said it would issue up to 20.3m new shares at 150p each. It will raise £6.95m in a vendor placing to pay Randd directors in cash for their part of their stakes in the company and £23.03m by placing shares with institutional and other investors.

K3 will also raise £0.5m from retail investors through a subscription and Chief Executive John Rigby will buy 20,000 new shares.

K3 shares fell 10.4% to 157.74p at 11:56 BST.

Bolton-based K3 said in addition to the initial £9.27m payment for privately owned Randd it would use the money to fund an earn-out over three years costing as much as £7.5m based on performance. The rest of the money will be used to pay fees to advisers on the fundraising and acquisition and for further purchases.

K3 is a business sale broker that matches sellers of small and medium enterprises with buyers in the UK and overseas. Randd, founded in 2008 and based in Derby, helps businesses to secure R&D tax credits from the government in return for a percentage of the amount achieved.

K3 said Randd was a complementary business to its existing operations with cross-selling opportunities for both companies. It said Randd's prospects were linked to the market for R&D spending in the UK and that this had grown consistently as the UK had sought to fund new technologies and products.

Rigby said: "In Randd we have identified a business with quality at its core and one which we believe will continue to flourish under the K3 banner as we build upon the strong foundations put in place by the shareholders, directors and wider team over a successful 12-year trading history."