Financial services firm B Riley Financial (NASDAQ:RILY) has sold a new baby bond issue. The issue has a coupon of 7.5% and a maturity date in 2027 which are terms that are very enticing to us.
B Riley is a Los Angeles based financial services company that provides a full array of corporate finance, research, sales and trading services to corporate, institutional and high net worth worth clients. B Riley came public in 1997 and by and large they have been reasonably profitable, although they had a bit of a slip in 2014 when they had a loss. The company is not a large firm garnering revenue in 2016 of just $190 million.
B Riley recently announced the acquisition of regional financial services company Wunderlich Securities for total consideration of $67 million. This follows on the announcement in March of the pending acquisition of FBR & Co. in a transaction valued at $160 million. These deals are expected to close in early June. With the pending acquisitions B Riley will more than double in size and will be the self proclaimed leader in small cap underwriting and research coverage.
Since this issue fits our needs having a shorter duration we plan to purchase this issue if we can buy it at around $25/share. Note that B Riley has another 7.5% baby bond outstanding which has a maturity date of 2021 and is trading at around $25.75/share. One reason we are interested in the new issue is because we should be able to buy it at around $25.
Being a debt issue this issue likely won’t trade on the OTC Grey Market, but should begin trading in the next week under the ticker symbol RILYZ on NASDAQ.
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