While this type of lending is not new — clubs such as Leeds United have in the past used specialist offshore investment funds to finance the acquisition of new players — it will add to Formation’s credentials as a one-stop shop for high net worth sports people and celebrities. It will also help achieve Rodford’s target of fivefold growth over the next three to five years, something he has said is essential if the company is to survive as a listed entity.

“What we want to be is an IMG, an Octagon or a Wasserman Media Group,” he told Crain’s. “In the US they offer everything to their clients but in Europe a lot of people have tried to reach that Holy Grail and failed.”

Despite growing turnover steadily over the past few years and adding substantial growth potential with the recent purchase of James Grant Media, Rodford still believes Formation is too small to achieve its goal of becoming a successful one-stop shop for high net worth individuals.

Since starting out in 1994 as football agent Proactive Sports Management, Formation has grown its service to include wealth management, including property investment, tax and accountancy advice and expanded its client base to include television, music and sporting celebrities. In addition to the new fund, the group is currently looking at several opportunities to add a legal division and develop its own intellectual property business.

Still, with turnover of about £15m forecast for the year ending August — almost double the prior year thanks to the James Grant acquisition — and a market capitalisation of just £45m, Rodford believes Formation does not have the financial clout to operate at the level he desires.

“At the moment we are not a small company and not a big one,” he told Crain’s at Formation’s headquarters in Hale Barns. To address this, Rodford is banking on organic growth, in particular new opportunities arising from the acquisition of James Grant, and future acquisitions.

“This is a year of consolidation, but hopefully we will find something significant within the next financial year,” said Rodford, hinting that the best way for Formation to grow at the desired rate would be to merge with a peer of similar size.

However, Peter Ashworth, an analyst at Charles Stanley in London, does not believe size is an issue. For him, the important thing is Formation’s strong client base of high net worth individuals, such as Wayne Rooney, Ant and Dec and Simon Cowell, who as well as being good names for brand awareness are also likely to be more immune to any consumer slowdown.

“That client base puts them in a very strong position,” said Ashworth, adding that this puts them in the same boat as IMG and as a result should make them attractive to investors.

Peter Temple, an analyst at Equity Development, agreed, saying that he believes the management have the ability to grow and manage the business successfully.

Rodford’s main challenge may be keeping the shareholders interested and, if necessary, taking advantage of one of the main reasons for being a listed company: raising new capital.

COMMENTS? cshoesmith@crain.com

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