Digital 9 Infrastructure Share Discussion Threads

[williamcooper104] 07/9/2024 08:21

Yes - only two explanations for PwC Either they were lied to, or they were just incompetent

[bagpuss67] 07/9/2024 08:17

Thanks for taking the lead on this William. For what it's worth I have also emailed the IR address asking then to consider litigation. I wonder if negligence (in a legal sense!) is also a potential action against Triple Point.

[joe say] 07/9/2024 07:30

I personally would have appealed to litigate against PwC as well.

I truly am shocked given that the NAV issue is central to the audit of this company (and therefore a heightened/elevated risk), that internal 'experts' also undertook valuations and sensitivity analyses, and yet they signed off so cleanly.

Yet again fees leading the process with so many noses in the trough

[williamcooper104] 06/9/2024 18:03

Sent to the IR contact I am utterly dismayed to find out that in a six month period when both credit/risk spreads and treasury/gilt yields have rallied that the NAV of DGI9 has supposedly fallen by 47% Given that markets have rallied from January to June, this means that the overstatement of the book values must have been more than 50% It is simply inconceivable that this is an ordinary market movement, and it is hard to come to any other conclusion other than that the assets were overvalued Given that management fees are based of book values this suggests that the level of fees has been more than twice what it ought to have been mIt would be disappointing if ambulance chasing laws firms intervened here, as that is a zero sum game with huge legal fees To get ahead of that risk, I would hope that the board would take immediate action to take the relevant actions to commence litigation against Tripple Point Best William

[williamcooper104] 06/9/2024 17:54

Sorry - didn't see already posted here

[williamcooper104] 06/9/2024 17:54

https://www.linkedin.com/posts/paul-de-gruchy-4565a42a_governance-row-engulfs-digital-9-as-new-board-activity-7237847828746649601-i8FP?utm_source=share&utm_medium=member_iosGood post from Donald P on Linkidin Worth sharing/commenting; this really ought to be getting more media attention

[foetus in your brain] 06/9/2024 16:25

Comment on this and let's try to apply pressure to the jersey regulator to investigate triple point. If we can get the local paper involved it would help so please make some noisehttps://www.linkedin.com/posts/paul-de-gruchy-4565a42a_governance-row-engulfs-digital-9-as-new-board-activity-7237847828746649601-i8FP?utm_source=share&utm_medium=member_android

[stemis] 06/9/2024 14:34

I agree with that. As a new board, if you are going to take a write down as big as that, then you are surely going to write down to a level you have (to the extent it is possible) a high degree of confidence you can deliver, especially when you have indicative offers for some of the assets.

[tigerbythetail] 06/9/2024 13:10

This really should be it - the point of inflection. The new board would have to be mad not to have absolutely kitchen-sinked every bit of possible bad news they could. From now on they'll be heroes.
(Barring a full-on market crash, of course. But that goes for everything.)

[wskill] 06/9/2024 12:12

Well they say it comes in threes what next I wonder how can they top this debacle ,well done to Triple Point.

[williamcooper104] 06/9/2024 11:55

Yes - the only reason for that sort of valuation drop is an actual credit crunch - and that's just not happened

[return_of_the_apeman] 06/9/2024 11:51

Williamcooper104

6 Sep '24 - 12:19 - 2213 of 2214

0  1 0

"Yes but it’s doesn’t matter if DGI can’t fund it

Somebody else can"

Exactly!

[cc2014] 06/9/2024 11:47

This is definitely worth a read.

Amongst the snippets
Saggar believed it was ‘near impossible’ that Triple Point did not know the NAV was ‘significantly lower’ and repeated his call for fund managers to ‘sign off’ on valuations and face penalties if these proved ‘grossly inaccurate.’

[williamcooper104] 06/9/2024 11:19

Yes but it's doesn't matter if DGI can't fund it Somebody else can

[craigso] 06/9/2024 10:57

Most people who spend years in the City are well aware that buying something from Macquarie / Goldman Sachs / etc. at auction means that, by definition, you are overpaying.

There are also no shortage of funds / ITs with capital that needed investing - at almost any price - so they end up over-paying. Without strong controls, the 20 somethings are more interested in their bonuses than paying a fair price for good assets.

So a canny seller and some idiot buyers met at the Arqiva sales process back in the day...

All that said, I wouldn't have really expected that Arqiva is so capital-hungry that it could go the way of the water companies for example. (over-leveraged, unable to pay for needed investment)

[petomi] 06/9/2024 10:21

As others have noted a key point in the statement is "A major part of the NAV reduction is attributable to a re-assessment of the assumptions relating to the availability of finance for underlying portfolio companies and its impact on portfolio companies' growth outcomes in the valuation models, as compared to those inputs used in arriving at the NAV as at 31 December 2023."

That is saying (at least for this part of the NAV reduction) not that the growth assumptions were inherently implausible but rather that some of that growth couldn't be financed by the investee companies and/or DGI9.

One might debate whether that is consistent with an IFRS 'fair value' approach (not value in use) since the fair value method considers what a third party(ies) might pay. But setting aside that, from a practical point of view now we are in wind-up mode an acquirer who was better funded than DGI might be able to adopt the growth assumptions if they were otherwise reasonable. The key will be getting viable competition from credible bidders for each asset.

Having said that I agree with those who think TP should refund a large slug of their fees and the Arqiva deal seems completely misconceived.

It will be interesting to see the details and breakdown of the changes.

GLA

[williamcooper104] 06/9/2024 10:04

I'm glad they're still doing something as means there's something to sue

[tigerbythetail] 06/9/2024 10:01

Hi Craigso!
For what it's worth (not much!) I think and hope your post is on the money.
Surely it must be Arqiva that's taken the bulk of the write-down?!?

[williamcooper104] 06/9/2024 10:01

Yes auditors just used to audit that you had a valuation and that yes the numbers do add up But they do now actually audit the values, discount rates/assumptions

[craigso] 06/9/2024 09:42

Kitchen sinking is fine IMO if it allows the new Board to sell the assets for 45p when they might otherwise have given some BS "indicative bids don't meet our expectations for the true value of the assets" and leave us hanging.

But breaking it down asset by asset, you can't get that low of a NAV without a big writedown of Arqiva (or a near total writeoff of everything else). And the only asset that is quite dependent on a refinancing to extract value for equity is Arqiva. So I don't really believe the speculation that Arqiva hasn't been written down.

Writing everything else down close to zero and pretending that Arqiva is still worth 35-40p per share would be a disaster for us...

[tigerbythetail] 06/9/2024 09:36

Thoughts...
1. It's impossible to take a reasoned view on the new NAV without more details. We just have to hope that the new board have valued the assets as harshly as possible. That is what I would have done in their place - kitchen sinked the lot and blamed the old board. So there is hope the new NAV represents a minimum potential return.
2. Aquacomms are laying fibre in the Red Sea. Or should be. Does anybody know if the Houthis in Yemen have interrupted this operation? Could that be part of the reason for any write down over there?
3. If I were Triple Point, this part of the RNS would worry me. Is this laying the groundwork for legal action? - "Investment management arrangements. The Board has made significant progress in its independent review of the Company's investment management arrangements and will make a further announcement upon the conclusion of the process in the near future."

[joe say] 06/9/2024 09:13

Agree with Williams point about the improved environment in which to raise finance.

I have to say its staggering that Pricewaterhouse Coopers signed these valuations off, an extract of which is

In addition, given the inherent subjectivity involved in the valuation of the
investments, and therefore the need for specialised market knowledge when
determining the most appropriate assumptions and the technicalities of the
valuation methodology, we engaged our internal valuation experts to assist
us in our audit of this area. The experts performed the following procedures
for the investments:
• Reviewed the appropriateness of valuation methodology;
• Reviewed key valuation inputs and estimates used, such as comparable
company multiples and discount rates at 31 December 2023; and
• Reported their findings and conclusions to the audit team for overall
consideration and conclusions.

We considered the appropriateness and adequacy of the disclosures around
the estimation uncertainty and sensitivities on the accounting estimates.
Our testing did not identify any evidence of material misstatement



Makes an absolute mockery of the whole audit process and who is going to take them to task - shocking imo

[gonsan] 06/9/2024 09:07

the funniest part is that the other day I received marketing to invest on a "Triple Point VCT" - seeking to raise 10M with overallotment of 20"
Given the disastrous performance in every single one of their ITs and the obvious mismanagement of everything they touch, how are they even authorised to launch VCTs?
Is there no government body that looks into these type of operations and investigate them?

[williamcooper104] 06/9/2024 08:58

The wind up basis is still on the value of its assets and if those assets have got lots of growth potential then that's still in the valuation What's simply not credible is that in the last 6 months it's got harder to finance

[cc2014] 06/9/2024 08:43

‘A major part of the NAV reduction is attributable to a re-assessment of the assumptions relating to the availability of finance for underlying portfolio companies and its impact on portfolio companies’ growth outcomes in the valuation models, as compared to those inputs used in arriving at the NAV as at 31 December 2023,’


I'm completely puzzled. Shouldn't the portfolio be valued on a wind up basis rather than an assessment of it's future revenue streams.


No position here. I am quite shocked that the market really thought DGI9 was worth more than 45p (not that I think it is but the drop in share price suggests that's what the market thought)