London Third City has joined the increasing queue of rapidly expanding residential groups swallowing business expansion schemes. It has offered ś5.2m pounds for the shares in First Hunter and Second Hunter as part of plans to seek a public listing in two or three years.
LTC has already grown exponentially through acquisitions, including the ś3.9m pound takeover of Predator One last December. The purchase of Hawksworth Management year has added another dimension, with an extra ś7m pounds worth of property taken under management since it was taken over earlier this year.
The group has a powerful board including Richard Smith, founder of the pioneering Artesian Group and chairman Adrian Collins is a former managing director of Gartmore Investment Management.
Collins points out that the sophisticated computerised management system designed by the group will be a major factor in setting it apart from the performance of similar investors. LTC's portfolio was valued at ś2.43m pounds prior to the offer and two sales which brought in 235,000 pounds - a 20% uplift on book value.
Widescale rationalisation is taking place in the BES sector as the five-year tax holiday on these schemes run out. Investors are being offered the chance to take shares in new ventures rather than cash. They can then benefit from any further rising market values and still pay no capital gains tax on the subsequent appreciation in share prices.
The ultimate aim of groups like LTC is to form permanent residential investment and management vehicles with a public listing so members can trade shares. City North and Pemberstone have reached this goal. London & Henley could float next year.