MIDAS SHARE TIPS: RBG Holdings has the X Factor for investors

Nicky Foulston was just 18 when her father acquired racing circuit Brands Hatch. A multi-millionaire businessman, John Foulston had developed a love of motor sports and wanted to rescue the Kent-based venue from being turned into a housing estate by property developers. 

Just one year later, in 1987, Foulston died in a high-speed crash at Silverstone and his daughter became her family’s eyes and ears on the track, ensuring that managers pursued the strategy her father would have wanted. 

A fall-out with management ensued within months and, at the age of 22, Nicky borrowed £6million and took control of Brands Hatch. 

The year was 1990, Foulston made a phenomenal success of the business, and in 1999 it was sold for $195 million (£140million). 

Well judged: RBG helped Simon Cowell, second from right, buy out the X Factor and Britain’s Got Talent

Now, she is chief executive of an altogether different business, listed law group RBG Holdings. Foulston helped to bring RBG to the London Stock Exchange’s junior AIM market in 2018 at a price of 90p. The shares are now £1.35 and should increase considerably in value over the next few years. 

Foulston, a 12 per cent shareholder, is a great believer in dividends too, so payouts should become increasingly generous, even as the business grows. 

RBG started out as Rosenblatt Ltd, a highly regarded law firm founded by Ian Rosenblatt, a solicitor who first met Foulston when her father died. Having become a client soon after, Foulston remained in contact with Rosenblatt. In 2016, he asked her to help him make his firm less like a legal partnership and more like a business. 

Since then, RBG has become more efficient in the way it bills for work, and fees are collected more promptly from clients, sending profits substantially higher. 

There have been some high-profile cases too. Only last year, it acted for Simon Cowell when he successfully bid for full ownership of Britain’s Got Talent and the X Factor. 

RBG has been on an expansion drive since listing, acquiring corporate finance boutique Convex Capital in 2019 and prestigious law firm Memery Crystal two months ago. 

Foulston has also set up a litigation finance business, LionFish, run by former investment banker Tets Ishikawa, a specialist in the field. 

Litigation finance centres on lending money to companies or individuals so they can fight litigation cases. Finance providers then receive a share of the proceeds if their customers win. It is a growing field but LionFish is designed to be different from its peers, offering nimbler pricing, more flexible funding structures and faster turnaround times. 

Having started in May last year, the business has already received more than 250 requests for finance. Several cases have been accepted and success should result in some hefty returns, which may well translate into special dividends for shareholders. 

Brokers are optimistic about RBG, even excluding potential returns from LionFish. The Memery Crystal transaction was well received by big investors and should drive growth this year and beyond, especially as Foulston and her team help the firm to become more profitable.

Convex Capital advises entrepreneurs when they are looking to sell their businesses and it was hit hard by the Covid-19 pandemic last year. However, the business has bounced back in recent months and dozens of deals are in the pipeline. 

Analysts expect RBG to deliver a 78 per cent increase in turnover to £46million this year, with profits up 57 per cent to just over £9million. 

A dividend of 4.75p has been pencilled in for 2021, rising to 6.6p next year, with further strong growth expected thereafter.

Midas verdict: Nicky Foulston is shrewd, ambitious and determined to repeat the success she had with Brands Hatch in her youth. Progress to date has been encouraging, however the best is almost certainly yet to come. At £1.35 the shares are a buy and rising dividends represent a further attraction. 

Traded on: AIM Ticker: RBGP Contact: rbgholdings.co.uk or 020 7955 0880 

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This post first appeared on Dailymail.co.uk