Architect group SMC trims debt with £6m new share issue

SMC, the architecture and design group, has raised £6m as a result of issuing almost four million new shares. As a result, the rapidly expanding group is able to look for further acquisitions.

Stewart McColl, SMC chief executive, said: “We’ve raised some new money because our debts added up 84% of our [shareholder] funds. This move takes that figure down to 50%.

“We’ve done all our recent deals with debt as it was cheaper than going to the market. That strategy has proved to be right. SMC’s share price was 143p before we made the five acquisitions announced on 25 September. The price has subsequently climbed to 170p, allowing us to issue these new shares at a price of 160p.”

Of the latest five deals, four of the architect groups were based in Scotland and one in England.

“We are now the largest practice in Scotland,” said McColl, “with a staff of 227 that includes 81 RIBA architects. We wanted to be in Scotland because the market is expanding and we had nothing - our only project has been a £2m distribution centre.”

Analysts anticipate that SMC’s turnover will climb to £35m this year and to more than £55m in 2007.

There is no shortage of architects wanting to join the fold. “They know that we buy successful businesses,” said McColl. “Capita buys failed players that are in administration or liquidation – we’re not interested in that.

“In March we did a deal to buy Alsop after its managing director had approached us as the venture capitalists behind it wanted to exit. At the end of May we bought Charter Architects after they had approached us.

“And of the five new deals in September, it was Hickton Madeley Architects who came to us.

“Once in the group, they all know they can win bigger projects. Typically, a client won’t award you a contract if its value represents 25% or more of your annual turnover.”