The equipment finance company FlexiGroup yesterday reported a strong increase in earnings for the December 2009 half and launched a fully underwritten capital raising to support new funding lines and business expansion.The company will make a $15 million institutional placement and a $25.5 million non-renounceable rights issue. The offer price of $1.28 a share is a 17 per cent discount to the February 22 closing price.The company reported that it is negotiating two new bank facilities that will add $150 million of funding. It is also working on being "securitisation ready". Half the new capital will be used as "cash support" to facilitate the transition to new rated facilities. The new facilities will reduce funding costs by about 250 basis points.The other half of the capital raised will provide a base for $100 million in net additional funding. One of the group's existing funders, a foreign bank, has got out of Australia and the $38 million portfolio is in run-off.The company's expansion strategy is based on a view that the big banks' move to more conservative balance sheet structures and foreign bank withdrawals from the market will leave gaps in areas such as business leasing and vendor finance.FexiGroup has recruited "an experienced vendor finance team" from another company and will start moving into that market this year.The new team will form the nucleus of a new division for the group, sitting alongside the established businesses of Flexirent, a small ticket leasing business; Certegy, an interest free and cheque guarantee business; and Blink, a mobile broadband wholesaler.Revenue for the six months to December was $100.1 million, 15 per cent up on the previous corresponding period.Net profit more than doubled, jumping from $14.6 million in December 2008 to $35.6 million in the latest half. The increase included a one-off $17 million credit to the profit and loss account after the company set up a new tax consolidation group and re-set its tax cost base.Impairment charges increased from $12.3 million in December 2008 to $12.7 in the latest half, representing 5.1 per cent of receivables.