A stalled SME-focused bank, set up seven years ago by entrepreneur Jim McColl, is back on track after receiving a £1m investment.
Caledonian Holdings, an Aim-quoted investment vehicle, has conditionally agreed to invest in AlbaCo, providing £750,000 in cash for 750,000 new shares, equating to a 2.73% stake.
A further £250,000 of existing AlbaCo shares, currently held by Mr McColl, a Caledonian director, are to be acquired via a proposed share swap involving the issue of nearly 5.8 billion new Caledonian shares.
Completion of the cash investment is expected in the coming days.
AlbaCo, based at Mr McColl’s HQ in East Kilbride, is currently pre-revenue and reported a £8.96m loss after tax and net assets of £6.31m as of February 2024.
The independent directors of Caledonian Holdings, Chris Cooke and Brent Fitzpatrick, have met with the full executive team at AlbaCo as well the CEO and CFO specifically for the purpose of furthering due diligence on AlbaCo as part of the Investment.
Mr Cooke said the deal underpins the company’s new direction. “The Investment marks what we hope will be the first of a number of dynamic transactions and investments aimed at building Caledonian Holdings into a successful investor in innovative financial and payment services businesses.”
This is the first deployment of Caledonian’s revised investment strategy following earlier board changes and fundraising.
AlbaCo is targeting SMEs in under-served regions across Scotland and the UK, positioning itself as a customer-centric alternative to high street banks through bespoke technology and relationship banking.
The board of Caledonian Holdings said it believes that the financial prospects for AlbaCo are “very encouraging” and it is understood that these have been tested by the regulators as part of the licensing case.
It has applied for a banking licence from the UK Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) and a decision is said to be imminent.
The board of Caledonian Holdings understands that discussions are under way and progressing very well for AlbaCo to raise additional funding upon, or following, receipt of the licence.
Mr McColl set up the bank in 2018 and hired former Airdrie Savings Bank CEO Rod Ashley as CEO. It was chaired briefly by former Scottish Financial Enterprise CEO Graeme Jones and later by former Metro Bank executive Rod Sharpe.
It is now chaired by Jeremy Brettell, also ex-Airdrie Savings Bank where he was chair. He chaired AlbaCo between 2018-2022, when he stood down as a result of a conflicting role.
He returned to lead the bank to lead its authorisation. An independent chartered director and fellow of the Institute of Directors, he was awarded the IoD non-executive eirector of the year in 2018.
The CEO is now Jonathan Thompson, former CEO and co-founder of Bank North. Gareth McColl is chief operating officer.
Mr McColl shot to public attention through his ownership of the Ferguson Marine shipyard until its nationalisation.
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