Ive had these on the watch list for a few weeks now and the company seems to be getting a lot of Institutional Interest.

Its basically an asset based lender to smaller companys and carrys out a similar business to that of the big clearing banks, but as the economy gets tighter and bank lending gets more difficult to secure customers are turning to this Northern based company as an alternative.

Description Of Business.

Davenham is a leading, independent asset based lender to the UK SME sector.

The business was founded in 1991 in Manchester from where its core operations
are run. In recent years, Davenham has begun to expand and it now also operates
from offices in Leeds, Birmingham, Liverpool and Newcastle.

Davenham provides lending solutions designed to meet the financing needs of UK
SMEs - typically involving loans of between 10,000 and 3 million. The
Directors believe this is a profitable and attractive market place that is not
adequately serviced by mainstream lenders, which tend to adopt a formulaic
approach to lending decisions. Davenham has a diverse loan portfolio, with its
lending activities organised into three divisions: property finance, asset
finance and trade finance.

Davenham enjoys strong client relationships reflecting high levels of customer
service and tailored financing packages. The Directors believe that Davenham's
ability to form a commercial view and reach lending decisions quickly underpins
premium rates and high levels of repeat business. New clients are typically
sourced through introductions from existing clients, direct approaches and a
network including mainstream lenders, finance brokers, accountancy firms and
other professionals.

Davenham has a strong financial record both in terms of revenue growth and
profitability and has consistently achieved a gross return on loan portfolio of
circa 20 per cent. The Directors believe this results from Davenham's position
as a leading lender in a profitable and niche market place in which the
competition is fragmented.

Davenham is funded by a group of banks led by The Royal Bank of Scotland plc and
has a facility of 175 million, which the Directors believe is sufficient for
Davenham's current requirements.

The Placing:

Davenham, a leading independent asset based lender to the UK SME
sector, announces completion of its admission to AIM and that trading in its
ordinary shares commenced at 8.00am today.

Panmure Gordon, the Company's broker, has placed 10.9 million new
ordinary shares on behalf of the Company raising approximately 27.7 million
before expenses, and also placed approximately 6.7 million existing ordinary
shares for approximately 16.9 million on behalf of selling shareholders.

Approximately 17.2 million of the proceeds of the issue of new
ordinary shares will be used to redeem certain loan notes and mezzanine debt.
The balance of 10.5 million will be used to increase the capital base of
Davenham and to pay for the expenses of the flotation.

Davenham will be included in the Speciality and Other Finance sector
and will have an EPIC code of DAV.L.

Hawkpoint is the nominated adviser and financial adviser to Davenham
and Panmure Gordon is broker.

Dunedin and Indigo backed the buyout of Davenham in 2000 and have
supported the Company through to a successful flotation. They will remain
supportive shareholders.

The placing took place at 254p.

Director Speak.

David Coates, Chief Executive said:

'We are delighted by the positive response to the placing and the completion of
our admission to trading on AIM. I am pleased to welcome our new institutional
investors as shareholders of Davenham.

'We are well positioned to capitalise on the attractive growth opportunities in
our market place and we believe the flotation will raise our profile and support
future growth by strengthening our ability to lend, expand into the Midlands and
the South of the UK and fund selective acquisitions.'

I see from the Brokers forecasts that the Pospective P/E is approx 10 falling the year after. Might be rewarding to get in at this early stage.

DYOR.

Cheers GF.

An interesting piece of research from Growth Company Investor......

Davenham - BUY
Companies: DAV
23/11/2005

Shares in Davenham, an asset-based lender to small and medium-sized companies, rose to a slight premium of 3% on the first day of trading. The company has raised 23.5m net to help fund further growth of the business, both organically and by making acquisitions.

At present Davenham is based in the North-West and has plans to move into other regions. Chief executive David Coates aims to make one acquisition in the coming year of up to 10m. This would expand the loan book by 30m. The group, which he believes is filling a gap traditionally occupied by branch bank managers but now vacated by the major clearers, has experienced strong growth in the past two years, doubling turnover to 28.5m for the year to June. This has been achieved despite the loan portfolio only rising by 62% to 151m during this period.

Profits, before tax and interest from mezzanine debt (since repaid), rose by a similar amount to 9.3m. Davenham will lend up to 3m to companies through three divisions: property, trade and asset finance. The group has over 2,400 clients across many sectors. Small housebuilders, importers and distributors are typical customers. The groups loans charge an effective APR of 18%. But bad debts are only 1.5% of loans.

Coates has a strong background, with experience at Royal Bank of Scotland, Standard Chartered and credit agency Experian, and is ambitious to grow the group further. A raft of institutions has supported the float, possibly drawn by Davenhams promise to pay a 5% dividend this year. Private investors should consider joining them as well.

cheers GF.

The volume is very high indeed.

cheers GF.

Morning GF ,,they were one of the two main tips in Small Company Share Watch on Saturday ..

I wondered where the volume had come from. Thanks Jimmy, Ill e-mail and request a copy from a buddy.

cheers GF.

Buys still coming in thick and fast, looks like a mark up is due any time , only 2 sells so far.

cheers GF.

A very good start for this one. Plenty more to come me thinks.

cheers GF.

Any other day and this would have been up. Data shows all buys and no sells.

cheers GF.

Volume high again on buy side and has touched up.

cheers GF.

Moved ahead nicely this afternoon, now 290p to buy.

cheers GF.

Shore Capital has initiated coverage of Davenham Group appending a buy recommendation and a 360p price target.


cheers GF.

You got any forecasts GF ?

Hi Dil, only those from the house broker, prospective P/E of 9 2006 that was at 275p a share, and 2007 P/E of 7.5.

Turnover has already grown from 16.0m in 2003 to 28.49m
for the year to 30 June 2005. Profit during the period has lifted from
4.82m to 8.13m. But in fact these reported profits have been obscured by
the interest arising to loans from its VC backers. Post the float last
month, those loans have been redeemed entirely. In fairness to the complete
picture going forward, when adjusted for the restructured balance sheet,
profit has grown from 5.80m to 9.25m.

cheers GF.

Moving up nicely now. To buy at 300p but I think you can get inside the spread.

cheers GF.

Had a few myself , looks interesting.

Good luck.

Wellcome aboard Dill.

cheers GF.

Don't tell those sill b*ggers on the SOR thread , they'll ruin this one too :-)

Cheers GF.

Also tipped in "Share Weekly" this morning.

cheers GF.

And tipped again over the weekend....................

Update - The Business AIM Investor column says buy Davenham.

Every Tom Dick and Harrys been tipping this one, it must have some appeal. 6 sources in all.

cheers GF.

Article from The Business this weekend-

DAVENHAM is a money lender created from a management buy-out more than a decade ago from the Burns Anderson group. The founders made their exit on flotation, leaving the company in the hands of new management.

The primary area of business, responsible for almost half of the 150m loan book, is bridging loans, refurbishment loans or advances to small property developers. An average exposure of less than one year and around 300,000 indicates the cautious way the risks are spread. Similar figures apply to the trade finance division, which accounts for a third of the portfolio. This comprises a range of buy-out and acquisition support activities and invoice-discounting services.

Operating in areas where mainstream financial institutions either fear to or cant be bothered to tread, Davenham makes a 20% return on secured lending from its 2,400 corporate clients. The company is supported by a 175m syndicated loan from its own lenders. Bad debts provisions are low.

Income in the year to June 2005 was 28.5m against 22m in 2004 and just 16m the year before that, so the company is growing at a fair canter. With interest payable of 9m and administrative expenses of 11.3m (1.6m more than in 2004) this meant pre-tax profits of 8m.

Davenham says its activities are complementary to banks as opposed to being competitive, describing bankers as tending to lend according to a template rather than individual corporate circumstances. Davenham reckons there is a target market of 80,000 companies similar to those it serves, providing plenty of opportunities for the future. The companys record in generating premium returns speaks for itself.

One threat is that the company is reliant on the primary lines of credit that it can secure. The facilities will have to be renewed or extended within two years. However, by refusing to compromise on adequate security or quality of operation, and by spreading the risk, Davenham appears to operate from a stable base. The Aim flotation, which took place at 254p per share, raised 24m for the company of which 17m of which was for debt reduction.

Davenham is capitalised at 67m. The 2005 earnings, if replicated in the current year, would mean we are looking at a p:e ratio of 12. The underlying earnings figure should be more of course. With strong current momentum, the spread of business, and no dependence on large transactions, it all adds up to an opportunity with much more upside potential than downside. Davenham is a buy.

cheers GF.

Ok a down day the firs for a while, but its all systems go here.

cheers GF.