Explorer Group pulls plug on First Capital transaction

John Aldersley, controlling shareholder of Explorer Group, has filed a letter of termination of his share sales agreement with FirstCapital Group in an attempt to end the $14.6 million acquisition process begun in July 2006.

Explorer Group is the holding company of Direct Portfolio Services, which offers the separately managed account (SMA) products DirectPortfolio and ShareInvest.

Executive chairman of Direct Portfolio Services, John Aldersley, lodged the termination letter on June 21, 2007, after his earlier notice to complete expired on June 20.

He cited ongoing fiduciary responsibilities to Explorer Group clients as his reason for the termination, with the pending purchase preventing the business from trading or hiring new staff.

“I’ve been about as patient as one can be … At the end of the day, it’s dragged on for almost 12 months, and I’m trying to bring it to a conclusion one way or the other,” Aldersley said.

“They haven’t bought my shares, and I’m trying to bring it to a quick conclusion.”

He said the debenture-based investment company had initially intended to purchase his shareholding in September 2006 using capital that was to be raised through a placing with sophisticated investors, but neither this nor a proposed prospectus-based equity raising ever materialised.

“Our business is definitely bankable and can be grown. It’s a very viable, scaleable business,” Aldersley said, pointing out that Explorer Group was attractively priced despite First Capital Group’s inability to raise the funds for the purchase.

Explorer Group acquired the first direct SMA product provider in Australia, as well as the software that drives the product, and has since launched ShareInvest, a SMA/wrap competing with the likes of BT Wrap and Praemium.

According to Aldersley, Explorer Group has been hanging in “suspended animation” while waiting for the deal to be finalised.

He is concerned at First Capital Group’s reported $2.18 million loss for the period ending December 31, 2006, and the fact its share price last week (Thursday, June 21) closed at 7.5 cents, down from 75 cents at the end of June 2006.

First Capital Group also intended to purchase financial services organisation Fincorp in March of this year before its collapse jeopardised $200 million of investors’ money, but pulled out of the deal at the 11th hour because of anomalies uncovered during its due diligence investigations.

Les Freeman, managing director of First Capital Group, was unable to be contacted for comment.