The firm, which makes own label and branded cakes under licence for companies such as Nestle and Thorntons, said that the investment would enable it to expand its brand portfolio and enhance efficiency through new manufacturing and automation technology. Finsbury expects the investment to eventually deliver an annual benefit of £2 million.
Several Finsbury executives have taken shares sold at 38p each – slightly below the market rate.
"We are committed to investing in the Company to build upon the foundations that are already in place and look forward to growing the business further over the coming years, in turn driving shareholder value," said John Duffy, Finsbury's chief executive.
Meanwhile, Finsbury announced a “small decline” in its cake business in the first quarter after export sales slowed. However, Finsbury, which confirmed its full-year targets, said that the dip had been offset by stronger performance in its bread and free-from divisions.
