• Cenkos – Andy Stewart (of Collins Stewart notoriety) purchases shares in the company taking his stake to 7.4%

Harwood Capital – Going Private

Share Price 158p

Mkt Cap £99m

Conflict Disclosure: No Holding

  • Offer Recommended acquisition at 145p/sghare in cash, a 8.3% discount to the price on the screen. The acquisition has 68% irrevocables.  The board recommends the offer in the light of a challenging environment for organic growth, upward cost pressure and the likely need for further support for acquisitions.  
  • Valuation The offer is reported to be 16.3X PE for the 12 months to 30 April 2019.  Results for the year to October 2019 haven’t yet been announced but it equates to 15.9X forecast PE to October 2019.
  • Conclusion It isn’t a question of the lack of valuation as it would appear to be going private at a modest discount. But managements desire together with trading conditions and the lack of liquidity are cited as the reasons for the board’s recommendation, which is not a great endorsement for the AIM market. Note that AFH also hasn’t announced its results to October 2019 and trades on 12.1X October 2019.  

First Property  – Sale of Property

Share Price 45p

Mkt Cap £50m

Conflict Disclosure: I Hold

  • Update: Sale of a 50% interest in a polish property for Eur 44m, which represents a 13.4% premium to its book cost and a 10% premium to its market value per the independent assessment. Net cash receivable by the group is £16.7m taking the cash held by the company to 22p/share.
  • Valuation NAV increases by £3m. At historic cost NAV was 59.6p/share which will increase by 6% while at market value the NAV increases by a little less above the c65p at the end of September. With £602m of AUM yielding c 60 bps of management fees the fund management business is perhaps worth £12-£15m
  • Conclusion I am keen on the theme of these niche emerging fund managers which includes Mercia asset management, Arrow Global, and Intermediate Capital. For this one you can also buy it at a c27% discount to Nav.  Thankyou illiquid markets.

jeremy@charltonillingworth.co.uk