Duke Royalty (DUKE:44.5p), an Aim-traded company that makes its money by providing capital to companies in exchange for rights to a small percentage of their future revenues over a typical term of 25-40 years, has raised £17.4m at 44p a share through a placing, retail offer and small open offer. The new equity equates to 16 per cent of Duke’s enlarged share capital.
Alongside a new £30m five-year credit facility priced at Libor plus 7.25 per cent with Honeycomb Investment Trust (HONY), and an uncommitted accordion facility which can increase the total facility to £50m, Duke now has substantial additional capital to invest into high return follow-on and new investments in its active pipeline. The board has paid down the £11.65m outstanding balance on the revolving credit facility which saves on interest charges while it’s carrying out due diligence on new investments.
Around £8m has been slated to provide royalty funding to a 30-year old support services company in Ireland which supplies teams of experienced managers to mainly government clients on long-term contracts. Based on an initial cash yield of 13.2 per cent, and a 30-year financing term, Duke should receive an annual distribution of €1.14m (£1m).