SHARE PUNT OF THE WEEK

PRICE: 220p WHO IS IT?

Recent AIM entrant Trufin is a financing business with four divisions. DFC lends to firms selling motorbikes, caravans, yachts and industrial kit, areas that mainstream banks may not be willing to touch. Oxygen Finance helps councils make savings by prompting them to pay suppliers early, and Satago helps smaller businesses manage their cash flow. Lastly, it holds a 15pc stake in peerto-peer lender Zopa.

WHAT’S THE LATEST?

Trufin is applying for a UK banking licence, which could help lower the company’s funding costs and boost margins. Zopa has also proposed a new funding round, which could increase the value of Trufin’s stake.

WHO BACKS IT?

Hedge fund firm Arrowgrass Capital owns a 73pc stake in Trufin. The fund’s boss, Henry Kenner, was one of the founding members and chief executive of Arrowgrass. Schroders, Invesco and wealth manager Smith & Williamson also feature in the top ten shareholders, along with Norwegian family-owned investment firm Watrium, Credit Suisse and investors Dalton Strategic Partnership.

WHY YOU SHOULD INVEST

The company could prove to be cheap on a sum-of-the-parts basis, according to AJ Bell’s investment director Russ Mould. Added to that, the Trufin team is heavily incentivised to do their best for shareholders – their long-term incentive plan only starts to trigger if the shares rise by at least 50pc from the 190p listing price.

...AND WHY YOU SHOULDN’T

There are clear risks to investing in Trufin. The business is currently loss-making, and if the UK economy slows or hits a recession then loan losses would creep up further. Banking licenses for DFC and Zopa might also be delayed or even rejected, Mould noted, and there are no plans to pay a dividend. The size of the stake Arrowgrass owns might also make it harder for investors to buy and sell shares.