Rand Capital shares climb after winning $25M investment from East Asset Management

Shares of Rand Capital Corp (NASDAQ:RAND) shot up Friday on news that East Asset Management business is taking a majority stake in the venture capital firm.

Under the $25 million deal’s terms, East Asset Management will take a 57% stake in the Buffalo, New York-based Rand, but the current management team will stay in place. Allen “Pete” Grum will serve as president and CEO of Rand while Daniel Penberthy will be chief financial officer.

Investors applauded the deal, sending Rand shares up 34% to $3.11 in morning trade on Friday.

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About 8.3 million of Rand’s shares have been offered to East Asset Management for $25 million in cash and assets, in a split consisting of about $13.5 million in cash and the contribution of roughly $11.5 million in portfolio assets.

The contributed portfolio assets are income-producing instruments that will immediately increase net investment income for Rand.

“The additional assets provide us greater scale with more income-producing instruments that are immediately accretive to net investment income, while the cash enhances our liquidity and enables further expansion of our investment portfolio,” said Erland Kailbourne, chairman of the board of Rand Capital.

On the back of the deal, Rand will pay a $1.50 special dividend to shareholders, which will be paid in the form of 80% stock and 20% cash.

The deal’s purchase price of $3.00 per share represents a 33% premium over Rand’s closing price yesterday of $2.26.

Contact Ellen Kelleher at [email protected]

Story by ProactiveInvestors