Private equity house Dunedin Capital is on the verge of securing an £11.2 million cash windfall, as a result of portfolio company Davenham’s imminent £65 million AIM flotation.

Asset-based lending business Davenham is expected to join AIM on Tuesday 22 November and has now concluded a £44.6 million pre-float fundraising with the aid of broker Panmure Gordon. The refinancing has afforded Dunedin an opportunity to offload around two-thirds of its stake for a net £11.2 million. Based on the 254p AIM placing price, the private equity group’s remaining interest is worth a further £6.5 million.

For Dunedin, the total £17.7 million consideration marks a 40 per cent premium to the investment’s paper valuation as of April. It also represents a four times return on the group’s original stake – Dunedin first backed Davenham, which provides loans of between £10,000 and £3 million to SMEs, when the latter completed a management buyout in 2000.

‘This has been a very successful investment for us and we will remain a supportive shareholder of Davenham following its AIM flotation,’ comments Dunedin’s Brian Scouler.