Shares digital

General Capital (GENC:AIM) - Finals PTP: £2.8m (£0.1m) Divi: n/a (n/a)

The deterioration in credit markets is hitting the provider of secured loans to small businesses from two angles. On the one hand General Capital is seeing its own borrowing costs rising and may find difficulty raising fresh funds this year to meet loan growth forecasts. The other consequence of the credit squeeze is the negative impact it's having on investor sentiment, which is bad news for General's venture capital business.

General's vc arm lends at the pre-IPO stage and gets involved in the management side. It's not a VC in the traditional sense because the company doesn't take equity stakes and instead provides secured debt finance. However, General does take warrants, which are typically exercised at float, so Aim's IPO slowdown will hit profits here.

Shares says: At 76p, down 15% on results day, the shares are half where they were last year. Falls may be overdone but sentiment is unlikely to improve short term.

by: Simon Keane