Hi-tech investment is Capital decision

AFTER an eventful five years as a publicly-quoted company, Property & Capital Group would like to transform itself into a high- tech investment house capable of cashing in on the internet boom. It is also considering changing its name to CapitalTech plc.

The revamp, signalled by chief executive Ross MacDonald earlier this month, is one of a series of changes of direction made by the group in its short life on the Alternative Investment Market.

Floated in 1995 as an adviser to companies seeking AIM listing, Property & Capital moved into investment advice, followed by property management and investment. However, each move has met with indifference on the stock market. The shares have been stuck in a rut, edging up from an original offer price of 200p to just 220p.

This performance is, perhaps, not that surprising, given that the group has only just moved back into profit, making #931,000 pre-tax in the year to December compared with a #4m loss previously. But the valuation takes no account of moves which have transformed the business.

Most significant was the decision of chairman Robert Adair to sell the group around #60 million-worth of residential property in exchange for shares, which mean he now controls 90% of the equity.

The deal provides an insight into the wealth controlled by Adair, who also has a large stake in the Melrose oil exploration business and recently invested #14m in the high-tech sector through Skye Capital Partners.

"I do not intend to hold such a large interest in Property & Capital indefinitely. The shareholding will be watered down as the company issues shares for acquisitions," said Adair. "At the same time, the company will have access to reasonable amounts of cash by selling perhaps half of its present property portfolio."

Property & Capital recently sold a package of residential homes at auction for #7.5m having acquired them for #6.6m. Other sales this month have included #3.1m for 61 flats in the west of Scotland and #4.5m for various small properties in the north of England.

Adair said the group has "dabbled" in high-tech investment. It has bought 833,000 shares in Corporate Executive Search at 3p a share - the price has since spiralled to more than 45p following its acquisition of an internet-based credit card operation.

More significantly, the group was advised by new director John Minshull-Beech, also managing director of Skye Capital, to invest #500,000 in Telematix, which has a range of vehicle-tracking services which use satellites and cellular communications. There have been rumours that this stake has already attracted takeover approaches, valuing the whole business at up to #50m.

The group has also invested #160,000 in a company called IPBell, described as one of the first Next Generation Global Operators. It already has the support of Cisco Systems, Hewlett-Packard and Oracle.

In view of this, it is surprising that only one investor turned up at the company's shareholder meeting at its Glasgow offices on March 10, when directors asked for permission to increase its capital base. She was told the company was considering changing its name to CapitalTech plc to reflect its change of direction.

And if all goes to plan, the revitalised company may need larger premises next time.

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