Equals Share Discussion Threads

[greenknight1] 04/4/2024 12:10

Hotting up here

[carcosa] 03/4/2024 15:35

Given the length of negotiating time I would anticipate take out price would be north of 200p.

Indeed to quote from the last Zeus Broker note..

"In November 2023, the Board initiated a strategic review. We see organic growth and bolt-on acquisitions justifying a value of 3x to 4x 2024E sales (i.e. £330m to £440m enterprise value; equity value of £293m to £403m, which is 157p to 216p a share). Private Equity, which could accelerate the M&A, should see value over 200p a share.

If Equals maintains revenue growth of 20%+, which we expect, its share price should double over the next 3 years".

[masurenguy] 03/4/2024 09:13

For what it's worth, Simon Thompson in the Investors Chronicle thinks that 175p is a likely takeout price if an offer materializes. Nice if that happens but I think it would be closer to 160p. Downside, if no acceptable deal can be agreed, is probably circa 100 - 105p.

[ltinvest] 02/4/2024 11:36

I see thanks for the clarification

[jaknife] 02/4/2024 10:58

LTINVEST,

"Yeah not big material short. But looking back at the 8.5 RNS forms goldman has been closing/reducing a short position for madison dearborne over the last few months which is interesting as they are linked to a potential bid. Would be interesting to know the size of the original position and when it was opened. But at least a few hundred thousand shares if I'm reading the RNS' correctly."

That's not what the RNS says:



1. Goldman Sachs are connected to Madison Dearborne but there's nothing in the RNS that suggests that the dealing that GS have undertaken is on behalf of MD. GS are connected to lots of parties, *IF* any of these trades were on behalf of someone bidding then there would be explicit disclosure with that bidder's name.

2. GS are a market maker, it's their job to buy and sell shares on behalf of clients.

3. The RNS is written from the perspective of Goldman Sachs, it says:

A. GS have sold 32,969 shares, and
B. GS have reduced a short CFD with a client over 32,969 shares,

Hence from the client's perspective, whomever that might be, that client has reduced a long cfd by 32,969 shares.

Ultimately you can just ignore the CFD to understand what the client has economically done - the client has sold 32,969 shares at £1.1844.

JakNife

[ltinvest] 02/4/2024 09:32

Yeah not big material short. But looking back at the 8.5 RNS forms goldman has been closing/reducing a short position for madison dearborne over the last few months which is interesting as they are linked to a potential bid. Would be interesting to know the size of the original position and when it was opened. But at least a few hundred thousand shares if I'm reading the RNS' correctly.

[jaknife] 02/4/2024 09:24

There are no material short positions in Equals Group, you can confirm that by looking at



which shows that there has NEVER been any material short interest in Equals

or by looking at the FSA's source data:



JakNife

[ltinvest] 02/4/2024 08:57

Maybe a partner had a short open and they closed out cos they are about to put on a bid. Looking at the RNS the whole position was closed on Thursday. Not sure why you would short if your own company is in contention for a bid though may have been a short term trade. Would think any shorts closing connected to Madison Dearborne would be seen as a positive

[adorling] 02/4/2024 08:37

RNS: How can a bidding Company be holding short positions? Surely that could be seen as manipulation if no bid materialises. However, the RNS does state they are reducing their short position so guess that is a confident sign an offer will materialise?

[qs99] 02/4/2024 08:33

Agreed on all

[ltinvest] 02/4/2024 08:32

Good stock for the isa before the cut off date so could be some using up their allowance. Strong start after the easter weekend though. Not far away from new tax year so could be traders betting on a bid in the new year. And inflation coming down so better economic outlook in general

[qs99] 02/4/2024 08:16

Nice start to the week, hopefully bodes well for some competitive tension in the bidders! DYOR

[ltinvest] 27/3/2024 16:20

Does equals break out interest from client balances? Would be interesting to see how much they make. Alpha fx made like £73mill on interest on client balances which is a crazy amount

[boozey] 23/3/2024 12:58

With two bidders now at the table, no one party can control the narrative. We will see how it unfolds. Very surprised that the share price is broadly where we were before any strategic review was announced. Given the business is performing strongly irrespective of takeover possibilities, the current state of play means that the risk/reward profile is very favourable with far greater upside potential than downside risk which is the reverse of what you would typically expect in this sort of situation.

[aishah] 22/3/2024 11:45

TechMarketView yesterday:

In the face of media speculation, AIM-listed payment platform provider Equals Group plc confirmed yesterday that it had received an indicative offer for the business from a consortium comprising London-based fintech software provider Railsr (Embedded Finance Ltd) and TowerBrook Capital. The bid follows a Strategic Review initiated by Equals last November and comes on top of ongoing discussions with Madison Dearborn about a possible takeover. Both sets of potential buyers now have until 17 April to make a firm offer.

Equals, which IPO’d on AIM ten years ago, has been growing strongly of late supported by two acquisitions in 2023. 2024 has continued that trend so far with revenues reaching £22.2m in the period to 15 March, up 28% from £17.4m in the same period in 2023. Trading has been robust across the business with particularly strong growth from Solutions.

We’ll need to wait until mid-April for both the final Q1 results and, hopefully, some clarity on whether Equals’ future lies as an independent entity, or as part of a broader business.

[ltinvest] 21/3/2024 17:49

Holding onto gains so far. Maybe take another run at 130p over the next week or so. May get tipped again in the Sunday papers this weekend. Low risk stock pick to for them to point out to their readers

[daveme] 21/3/2024 12:15

mcl1, I definitely agree about the raised profile of equals as a result of yesterday's bid. The downside risk is definitely low with a decent upsides gain. What more can anyone want?

[mcl1] 21/3/2024 11:38

Possibly so, prior to yesterdays intervention by Hammond. One good thing from yesterdays move will be the publicity / attention it will bring to Equals and further suitors may appear....either way the share price just makes no sense to me.

[daveme] 21/3/2024 11:23

As someone previously posted, the reason for the relatively low share price may well be because it is not expected a sufficiently high enough offer will be made to be acceptable to the board. The board have high hopes for this company and I share their view.

[qs99] 21/3/2024 11:06

I agree, maybe Brummy Git if he is reading can opine?

[mcl1] 21/3/2024 09:39

I totally agree with all of the above so why are they still under 1.20 when they have two potential acquirors ........it makes zero sense to have no takeover premium in the current share price

[qs99] 21/3/2024 09:18

indeed, hence the need for a proper premium, any acquirer is going to love those cash flows and net cash on the balance sheet at the moment - take out any future divi plans and PLC costs etc for even more cash.

£1.75 is probably about right, anything North of that, well done the Board!

[ltinvest] 21/3/2024 09:12

What's clear is if the company gets brought or not its basically a cash machine. I would expect if it isn't brought there would be a few more easily funded bolt on acquisitions and a bunch more cash paid out to shareholders too.

[mr stephens] 21/3/2024 08:16

Aim-traded fintech payments group Equals (EQLS:118p), a fast-growing challenger brand in banking and international payments, days as a listed entity look numbered after it attracted bid interest from another party.

A consortium comprising Embedded Finance and TowerBrook Capital has made an indicative non-binding proposal regarding a possible offer for the whole company. This follows a strategic review that has led to ongoing takeover discussions with Madison Dearborn Partners. The Takeover Panel has given Madison an extended deadline of 17 April to either make an offer for Equals or declare that it doesn’t intend to. Equals releases annual results the day before the deadline, which will make for a good read.

That’s because Equals has been disrupting traditional banks by focusing on small and medium-sized enterprises (SMEs). Investment in a cutting-edge technology platform, digital marketing initiatives and bolt-on acquisitions have expanded its offering and addressable market, which is driving a strong earnings


Riding a robust earnings cycle
MOST READ
Small Companies March 20, 2024
Bidding war for Equals Group heats up
In a trading update ahead of the annual results, the board revealed that revenue has risen 28 per cent to £22.2mn in the first 11 weeks of 2024 and that’s after the group delivered 37 per cent higher revenue of £95.5mn in 2023. The operational gearing of the business means that in a positive sales cycle, profits outpace the revenue growth, hence why analysts forecast 65 per cent higher adjusted cash profits of £20mn in 2023. On this basis, earnings per share (EPS) more than doubles to 6.3p. Cash is building, too. Equals started this year with £20.6mn of net cash, up 37 per cent year-on-year, and that’s after investing £7mn on acquisitions, earn-outs and a maiden dividend during 2023.

Furthermore, with cash profit expected to rise to at least £23mn in 2024, the group’s impressive cash generation means that the cash pile could easily increase to £33-£35mn by the year-end. Strip out cash from Equals’ £221mn market capitalisation and its current £200mn enterprise valuation equates to less 8.7 times current year cash profit estimates.

So, having selected the shares, at 119p, as one of my 2024 takeover targets (‘Four small-cap takeover targets to exploit’, 8 December 2023), it now looks increasingly likely that Equals will be bid for in the coming weeks.

An offer for the company around 175p a share seems fair valuation to me, or 45 per cent above the current price. It would also deliver a 127 per cent gain on my 77p recommended entry price (Alpha Research: ‘A high tech fintech payments opportunity’, 8 April 2022). Buy.