No buyback RNS.
Could mean... |
Would be good to know if the companies in question date back prior to the acquisition of Parkwalk Advisors (and were invested in by Parkwalk) then there might a conflict of interest impacting decisions...*if* the Parkwalk deal preserved rights to carried interest in 'Parkwalk' companies...that wouldn't be a surprise/industry standard. |
For unlisted companies in disruptive areas the NAV is really just guesswork. If you look at CHRY, you can compare Klarna to Affirm, which is listed in the US, or Starling to an alternative listed challenger bank in the UK. But I don't think you can for IPOs investments. Most of them are pretty unique with no obvious comparators.
So selling at NAV is a pretty significant event, as clearly the market is valuing the company at less than half of NAV. Having said that, the reality is also that the market does not trust IPO to invest any proceeds wisely. I'm not sure how that friction works itself out. A very substantial return of capital is clearly the sensible approach. The market has lost faith in the ability of growth trusts (GROW is at an even bigger discount), and imo no investment trust that is trading at a discount wider than 20% should be doing anything with surplus cash other than distributing it back to shareholders asap. |
It's not "value accretive" to sell something worth 100p for 100p. And IPO is cash rich... why sell private assets at NAV? They already have enough dry powder for investments and/or to juice the share price with a proper buyback / tender. If selling Featurespace at a premium didn't send the share price rocketing, selling part of Istesso near NAV certainly won't do it on its own...
A sale at a premium followed by a major capital return to shareholders is the only thing that makes sense to me. I know that they don't necessarily need to spend the existing £10m of buybacks before announcing more, but that might help explain why the pace has been picked up recently. |
Istesso and Perks have history. Dominic Perks was CEO at Hambro Perks until he suddenly left, then set up Lexham Partners in late 2023. In the latter days of his tenure at HPerks he tried to put together a deal to buy Istesso [Jan 2023].
It looks like Lexham have approx £300m in cash [needs double checking]. They could presumbly gear up with borrowings, or release more equity. Their recent purchase of a stake in Atom Bank was £3.5m
IPGroup currently hold 56.5% of Istesso. Valued at £127.6m, it's one of the larger constituents. It would be good to see a reduction in concentration and some sharing of risk. |
It is bizarre. Thought experiment only.
Purely a rambling thought.
Shame to sell assets at a discount to fair value. |
That doesn't make sense.. why would ipo relinquish their assets for a company to go into the market and buy their stock presumably for their own benefit?? I've heard of odd ideas but that's truly bizarre |
Lots of "ifs". Looks possible if........
Lexham would probably due DD to determine their own fair valuation of each holding.
Potentially higher than the conservative holding value on IPO's books.
Somewhere between both values Lexham would buy at a discount to their valuation but above IPO's carry cost.
Everyone satisfied.
Makes sense for IPO to ditch some ballast.
Need the transfer be in cash?
What if Lexham took the holdings in exchange for buying IPO stock in the market?
I don't know if this is possible. Certainly not simple. |
I would think at par value. Nothing else would make much sense unless they are desperate for the assets. |
The story says that "Lexham would acquire part of IP Group's stakes in about ten companies, although IP would retain part of its existing shareholdings, the person added." If that is the case, then I would have thought that the stakes would be bought at around current valuations, if not, IPO would have to write down the shareholdings it retains to whatever price it sold them to Lexham at. IPO is not in any desperate straights for cash, so I don't see why they would be prepared do that. Of course, ideally they would sell above current carrying value and thus get the cash and an increase in carrying value for what they held onto. However, I doubt Lexham would accept that, and if both parties are going to continue to be shareholders then a happy price is required. So likely at par or a small discount. imho |
As long as the price is close to NAV given the huge discount that persists with the share price it really doesn't matter. It will be hugely value accretive. |
Coz...Well that might be the case however it's about time that changed.....too many times we give away too much for too little and I for one am fed up of it.....clearly IP Group have been approached by Lexham and not the other way round....we hold the shares and therefore the cards.... have the balls to hold out for a premium that's what I say...they obviously see some great value in these companies over time.....
Only my view but I appreciate your opinion and bow to your knowledge....
Russ..... |
I've rarely (if ever) seen a deal like this go for a premium. Will be a test of the much vaunted (by management) IPO conservative valuations. Could probably live with a 20% discount to NAV if the cash was used for buybacks. |
I would like to think they would be looking for a premium over NAV as the potential of some of these companies could well be outstanding over the next 5 years or so....please for goodness sakes don't let them go on the cheap.....and certainly we need to retain a share in them for further gains down the line.....
Russ...... |
Apols for brief posting earlier, I was in a valley with a very poor signal.
This news implies that there is value in Istesso.
============================
Date of purchase: 03/12/2024
Number of ordinary shares purchased: 1,023,793
Volume weighted average price paid per ordinary share (GBp): 45.7887 |
Assuming they will be happy to accept NAV or close to - which would really start to move things in terms of discount to NAV. Looking very good here. |
hxxps://news.sky.com/story/ip-group-plots-sale-of-tech-stake-portfolio-to-lexham-13266035
Kleinman's scoops usually turn out to be on the money and the wording is fairly specific("advanced talks", "transaction could be agreed as soon as this week"). Suggests to me that this is not merely a "rumour only" but likely a done deal.
Obviously we will have to wait and see but depending on what is sold/how much value is sold, this will hopefully provide a further validation of NAV as well as further potential ammo for returning cash to shareholders.
It will be particularly interesting to see if part of the Istesso stake is included as the article suggests it will be... |
hxxps://news.sky.com/story/ip-group-plots-sale-of-tech-stake-portfolio-to-lexham-13266035 |
Sky News reporting that IPO very close to selling a portfolio about 10 companies to Lexham Partners.
Includes Paragraf and Nexeon |
Lexham. Can't post more right now. Might be rumour only. |
@frazboy
Large institutional holders don't necessarily want to sell or maintain a set % shareholding. In fact, the whole point of BBs is to mop up some of the selling pressure / liquidity so that new buyers push up the share price. But if institutions do want to sell, they likely contact the broker. For example, I noticed that the first couple of days of the CHRY buyback had large 1,000,000 share trades printed - presumably an institution selling - with large buyback amounts later RNSed.
Anyhow, the increase in IPO's buyback amounts is noticable. Surely that was partially done to punish the short seller. It also helps to get the £10m spent, so that hopefully they can announce a large one with the Featurespace proceeds. |
Qube Research short appears to have dropped below 0.5%
Shorts on ONT appear to have dropped below 0.5% |
Qube's short position has dropped below a notifable level.I still think the short position is insignificant. They may hover just below notifiable indefinitely. Plus, Lombard have added 2.5%, without impacting the price too much.Does anyone have any information on what large institutional holders do during BBs? I assume they sell into them to keep their holding the same as a percentage of stock available but that's guesswork on my part. |
Date of purchase: 02/12/2024
Number of ordinary shares purchased: 700,000
Volume weighted average price paid per ordinary share (GBp): 44.5674 |
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