Iqgeo Share Discussion Threads

[p1nkfish] 25/7/2024 13:41

Q4 for the cash. No specific date yet.

[saj3] 25/7/2024 12:42

HiDoes anyone know when the completion date is for the takeover and when does the money come in to the account

[p1nkfish] 16/7/2024 08:35

IQGEO is relatively insignificant in the greater scheme but is a microcosm of the way things are going. For all the talk of fibre, the Grid is the target market. They may not be in this KKR fund but the thinking applies.


Bloomberg: "The stock market’s fixation on quarterly earnings and short-term performance makes it a suboptimal funding venue for companies critical to the energy transition.

That’s according to Emmanuel Lagarrigue, a partner and co-head of climate at KKR & Co., who says such companies would do better with more patient investors.

“Public markets are probably the cheapest cost of capital,” Lagarrigue, who was a senior executive at Schneider Electric SE before joining KKR in 2022, said in an interview. “But at the same time, they have volatility and very short memories, so it’s very difficult to have a long-term, thoughtful strategy for very large and consequential corporate transformations.R21;

Money managers overseeing private equity and debt portfolios are now emerging as a powerful force in climate finance. It’s a timely development, as capital-intensive green tech companies struggle to attract sufficient investment and high-carbon large caps face diminished interest from shareholders for ambitious decarbonization plans.

An energy crisis, as well as higher inflation and interest rates, have complicated the energy transition. And add to that a protracted stock market selloff: Since the beginning of last year, the S&P Global Clean Energy Index is down 28%, compared with the 45% increase in the S&P 500 Index.

In private markets, however, it’s a very different picture. Between 2016 and 2023, private fund allocations to renewables have consistently outperformed those in oil and gas, according to a recent MSCI Inc. analysis.

“There’s that transition moment for companies that public markets are not equipped or designed to undertake,” Lagarrigue said.

There’s a mismatched time horizon between the demands of public market investors and the requisite period for decarbonization. And some corporate leaders are now coming to the conclusion that shareholders focused on short-term returns “are not going to support them anymore,” said Lagarrigue.

“It’s very difficult for the CEO of a company to go to their shareholders and say I’m going to invest 3 billion in a new asset that’s going to radically change our carbon footprint and create new growth, but the cash flows are coming in five or seven years,” said Lagarrigue. “That doesn’t work.”

There’s evidence to suggest that other private money managers are seeing an opportunity to step in. An analysis provided by Preqin found that of the $156 billion raised by private credit funds last year, about 16% went into products claiming to target environmental or social goals. That’s a bigger share than for any year since at least 2014, with data for this year through June indicating the trend is set to continue, according to Preqin.

While private investors typically shield company bosses from the shorter time horizons of public markets, they’ve also been called out for their relative lack of transparency. BlackRock Inc. Chief Executive Officer Larry Fink warned in 2021 of the need to shine more light on private markets and their role in climate finance, or risk “the largest capital-market arbitrage in our lifetimes.” Back then, the concern was more that private markets were quietly absorbing the high-carbon assets being sold by public markets.

More recently, however, BlackRock has taken significant steps to increase its footprint in private markets. The world’s largest money manager just announced it’s acquiring Preqin, one of the most frequently tapped providers of private-market data. That’s as private markets emerge as the fastest-growing corner of money management, with alternative assets expected to reach almost $40 trillion by the end of the decade, according to BlackRock.

Other industry leaders, including Blackstone Inc. and TPG Inc., have identified the energy transition as a key investment opportunity. Last year, Blackstone raised $7.1 billion for a fund to finance solar companies, electric car-part makers and technology to cut carbon emissions.

Lagarrigue is the co-head of KKR’s debut climate fund, which, though still fundraising, has made a handful of initial investments, including in UK power storage company Zenobe Energy Ltd.

Part of the fund’s mission is to address a gaping hole in climate funding: the so-called “missing middle,” or the chasm between venture capital and infrastructure funds where many companies developing critical green technologies fall. Such companies typically have proven business models and some existing cash flow, but require significant capital injections in order to grow.

“Early-stage capital and growth equity is all pretty well covered, so we have nothing to add to that conversation,” Lagarrigue said. “And classical renewables — wind and solar — are also well covered by infrastructure.̶1; So with the new climate fund, which has an expected average investment period of five to seven years, “we’ve taken the option to address the missing middle,” said Lagarrigue.

With some of the core components of the low-carbon transition, such as batteries and green steel, “you can argue that the technology risk is behind them,” he said. Those are the investments KKR is looking for.

Other more experimental areas such as direct air capture, small modular reactors or alternative proteins “still need to be de-risked, validated and consolidated,” he said. These technologies “will come to maturity at some point in the next few years,” at which point KKR could be interested in investing, Lagarrigue said."

[p1nkfish] 16/7/2024 08:28

Have to say I would agree with KKR statements wrt Energy Transition. Public markets, sadly, are not up to the job of readily funding the necessary capital expenditures and investment across the whole spectrum as too short-term and impatient.

It does mean a fair amount of the financial upside will go to a more limited number of beneficiaries - private equity.

KKR took on a high level Schneider exec about 2 years back and he appears very sensible & they "get it".

This is behind a paywall but makes a lot of sense. Go looking for companies in the "missing middle" as there is hidden value the public markets have a problem helping grow. IQGEO sits there but I srill believe they could have raised via the markets and this sale is to crystallize value for the Execs and Kestrel.

[p1nkfish] 15/7/2024 23:41

Not long now. KKR have bought themselves a little gem.

There will be Grid demand seeing how much disruption there was due to power outages from Hurricane Beryl. 2.3M or more without power at one point and about 200K still down and in intense heat.

Pushing at a door that wants to open.

I can see this reaching $1Bn valuation. Taken off the market before it had full chance to flower.

[p1nkfish] 29/6/2024 09:37

Reading the latest release it's probable money hits investment accounts early Q4.

[w13ken] 17/6/2024 09:59

Cheers pf. you too. This has been my best year for a long time so far where in addition to my largest holding IQG's rise of 49% I have Molten Venture (GROW) +47%, Kitwave (KITW) +35% and Warpaint (W7L) +54%.

Overall ISA rise is 26% YTD so would be happy if I end up with that figure. Disappointments include Sosandar (SOS) -25% where I just cautiously optimistic. My new favourite investment - where I've started to put IQG money - is Keller Group (KLR), the global leaders in ground-levelling for large construction projects. I've been accumulating that quickly so it's up to #4 in my portfolio

[p1nkfish] 17/6/2024 05:04

Agreed W13. Other opportunities have arisen or in process. Good luck with whatever is next.

[w13ken] 17/6/2024 00:00

So IQGeo ended up winning the Company of the Year award at the Small Cap Awards for what it's worth. Difficult to care now and if there are no rival offers I just want the sale to go ahead asap.

[p1nkfish] 28/5/2024 12:21

Schneider/Bentley talks floundered.
Supposedly Bentley family didn't want to relinquish control.

[simon gordon] 23/5/2024 18:03

p1nk,

Nowt to lose by phoning Max and getting his perspective and sharing yours. At least you'll have a better idea of what Kestrel are thinking and you can say your piece. Could be cathartic and insightful.

[p1nkfish] 23/5/2024 17:31

Makes no difference SG, it's done unless there are enough voting against or a much better offer arrives to sway heads.

Credit to KKR, they are some of the smartest people in the room, they can see the potential and "get it".

A raise by IQG would have temporarily dented the net worth of a few individuals whereas a change of ownership, whilst maintaining their jobs, is a very useful liquidity event to them.

The incentives are understandable.
The outcome a done deal.
That doesn't mean I can't whinge if I want to.

[simon gordon] 23/5/2024 16:29

P1nk,

Might be worth phoning Kestrel and speaking to the non-exec Max Royde. When I was in KBC I phoned Kestrel and spoke to Oliver Scott, who was a non-exec.

[p1nkfish] 23/5/2024 16:18

Please watch below.

An example, it's reckoned 75% of the US grid is over 1/2 over it's life expectancy and will need replacing in the next 15 years or so. Not only does the Grid need replacing it needs massive upgrades at the same time - or in any case - to allow fro more DER, EV, Data. The scale is mind-boggling.

Then - this is another example of just one Grid operator spending £60Bn in 5 years. Just National Grid alone. All this needs data collection at the edge, in the hands of the workforce in the field.

IQGEO was well placed before selling-out. Now that economic benefit is taken out of the hands of UK investors and transferred to PE in the US. IQGEO didn't even attempt to stand and grow in the UK market.



Were sweetners thrown in to get it past the BoD?
Anyone have any idea or thoughts on the matter?

The news drought was very strange and lack of any Grid news - coincidence?
They didn't even sell-out at the Cavendish target - it was below - after the stellar write-up.

[p1nkfish] 22/5/2024 17:27

Make if it what you will but not all of these are irrevocable and there's > 40% not included. Management may have to get out there to sell the deal to a few more before it's in the bag. TBD.

"Therefore, the total number of IQG Shares which are subject to either irrevocable undertakings or non-binding letters of intent in relation to IQG Shares is 35,548,984, representing approximately 57.52 per cent. of the issued ordinary share capital of IQG as at close of business on 17 May 2024 (being the last business day prior to the date of this announcement)."

[p1nkfish] 22/5/2024 15:59

Per the WSJ–

"A report last year by the American Society of Civil Engineers found that 70% of transmission and distribution lines are well into the second half of their expected 50-year lifespans. Utilities across the country are ramping up spending on line maintenance and upgrades. Still, the ASCE report anticipates that by 2029, the US will face a gap of about $200 billion in funding to strengthen the grid and meet renewable energy goals."

DER's.

[p1nkfish] 22/5/2024 04:52

Would expect the next set of results to be relatively downbeat to manage perception of the KKR offer relative to future prospects.

[w13ken] 21/5/2024 09:37

All good points pf. I'll repeat my earlier point: Would you consider leaving IQG money in the pot for conversion to TopCo shares? It's a bit of a shot in the dark and you'd have to sell the rest at nearer 470 than 480 but it would give a share of IQGeo's future success.

[p1nkfish] 21/5/2024 09:05

After much reading and talking to various, I agree with Threadneedle.

IQGEO would need more capital to grow but the opportunity is massive and all stakeholders should have been given an opportunity to support it. If there was no support then sell.

The door is wide open to solutions as sold to TEPCO, across the US. The lack of US Grid news I've banged a drum about, in my humble opinion, has a reason, a purposeful reason. Such news would have pushed the price up.

Just heard from someone in Houston (certainly not poor) concerning the hassle of re-establishing electricity after recent storms. The market is there, available. It needs IQGEO solutions.

KKR have gained a special asset and it's a steal. The price they have paid will return handsomely to them as it heads towards $1Bn valuation over the next 5 years.

This smells of the management and Kestrel wanting to take money off the table now and seeing a convenient way to do it quickly with the excuse of lack of liquidity and an unsupportive market. They could have issued more shares and when did they look for market support to prove it's unsupportive?

All is my own opinion only, dyor. This is a steal at 480p.

KKR need only set aside say £25m-£50M maximum to get this to the next level imho (abs max) and even Chapman himself said operational gearing will kick in and it's hardly in a none self sustaining position. The Cavendish forecasts (conservative) were from IQGEO's input.

It smells imho.

[red ninja] 19/5/2024 16:42

Investor's Champion podcast covers sad loss of IQGEO on aim plus it's probable much greater value a few years out.

[p1nkfish] 19/5/2024 08:58

Latest Cavendish note had £5 target and mentioned conservative/conservatively 59x.

[p1nkfish] 19/5/2024 08:50

I wonder who the institutional investor was that Sansom sold to in January?

Not at all impressed and even less so given a day or 2 before news release there was a post on here that with hindsight is suspicious, mentioning sale of the company???

Next will be H1 results that may look poor due to headcount increases and playing into the "what a good thing it is to sell now" narrative.

Add to that the long period with no news - very strange. Especially as Petti was so positive about planetary alignment.

All looks manipulative to me.

[simon gordon] 19/5/2024 07:58

Katie Potts has taken KKR's dosh. Earlier in the year she was bemoaning the lack of scale in the UK and that she was retreating from the UK.

Herald Investment Trust - Feb' '24

There is no doubt that the UK public market is in a more fragile state than during any previous downturn in living memory. The question is whether this is cyclical or whether the damage is more structural. The UK public market is currently a fairly difficult environment for entrepreneurs to raise capital and I am saddened by how much management teams have been diluted by fund raisings at distressed levels. I believe that value in our portfolio will be realised through takeovers but that the costs incurred by listed companies in the UK, with the recent added burden of ESG and auditing requirements, has become too high to attract new companies. Similarly, the costs for managing small investments have increased considerably, with additional ESG and regulatory costs. Unfortunately, active investment management does not scale, and it is conspicuous that larger players have withdrawn and funds have shrunk. There are now too few players in the UK to have an efficient market, and too few co-investors. It is a pity because public markets have provided long- term risk capital for the benefit of the wider economy, but the skillset is disappearing rapidly. It seems the UK will inevitably shrink as a percentage of the Company’s assets.

[simon gordon] 19/5/2024 07:51

Sunday Times - 18/5/24:

City giant Threadneedle clashes with KKR over tech company buyout

Columbia Threadneedle became aware of private equity firm’s swoop on Cambridge-based tech company only days before board backed takeover

Kohlberg Kravis Roberts earned its “barbarians at the gates” moniker for an aggressive pursuit of the American conglomerate RJR Nabisco in 1988. Thirty-six years later the Wall Street private equity firm continues to live up to its reputation after a row erupted at one of the City’s best known asset managers over a Cambridge-based tech company.

Columbia Threadneedle has accused KKR of “ram raiding” the London stock market after it pulled off a £316 million swoop for AIM-quoted IQGeo. Threadneedle, which is IQGeo’s second-biggest shareholder with a 13 per cent stake, is opposing KKR’s takeover bid.

IQGeo has developed software that allows utilitiy companies to track their networks using satellite imagery. It enables broadband companies to create a digital map of their cabling infrastructure, for instance. Previously, the majority of the records were in paper form.

“Although the financial metrics of KKR’s offer are very high, we do not believe it fully realises the long-term growth potential of IQGeo,” said James Thorne, UK equities fund manager at Columbia Threadneedle.

Threadneedle is aggrieved because it became aware of a months-long sales process, overseen by the Takeover Panel, only days before the IQGeo board announced the recommended takeover by KKR.

The company’s largest shareholder, Kestrel Partners, which owns 27 per cent of the company, was aware of the auction by virtue of having representation on the IQGeo board. Kestrel did, however, recuse itself from the sales process.

KKR is taking the unusual approach of financing the entire takeover itself, rather than bringing in lenders to provide bridging loans to fund the deal.

Private equity firms typically seek bridging loans to fund public to private takeovers. Lenders prefer to provide the loans on the basis that the private equity firm will execute the acquisition through what is known as a scheme of arrangement.

A scheme of arrangement requires 75 per cent approval from the target company’s shareholders, but allows the deal to be completed quickly so that the bridging loans are refinanced and then secured against the target company’s assets.

If the private equity firm cannot get 75 per cent approval, then it may switch the mechanics of the transaction to a takeover, which requires a simple majority. But completing the deal typically takes several months longer, leaving the lenders with outstanding bridging loans that are not secured against company assets.

As a result, financing a takeover as opposed to a scheme of arrangement is more expensive in terms of fees and interest costs.

It is the second time in short order that KKR has employed such a strategy. The firm prevailed in a £1.3 billion deal for Smart Metering Systems, another London-listed company, earlier this year despite opposition from its Glaswegian founders.

KKR’s decision to fund the deal in full negates such risks as it means financing is in place for either eventuality. It also means that the threat of opposition from dissenting shareholders, which could block the sale through a scheme of arrangement if representing more than 25 per cent, is mitigated unless more than 50 per cent of investors oppose the deal.

In the case of IQGeo, it means Threadneedle is powerless to stand in the way of KKR’s takeover of the business. Four of the company’s five largest shareholders — Kestrel, Charles Stanley, Herald Investment Management and Canaccord — are backing the takeover. Threadneedle first invested in IQGeo in 2010, when it floated.

Last week Jeremy Hunt, the chancellor, insisted that the UK can create a $1 trillion home-grown tech giant to rival Microsoft or Google.

Reflecting on the chancellor’s remarks, Thorne said: “We’ve been early-stage investors in UK tech for over 10 years, providing clients exposure to leading companies and producing strong long-term returns. IQGeo is a great example of the kind of company we look to invest in.

He continued: “KKR has seen the same potential in the company we did. IQGeo is now well-funded, generating significant revenue and profit growth with the potential to become many multiples of its current size.”

A spokesman for IQGeo said: “The board believes that the 480p a share offer from KKR, which crystalises a 11 times return over the last five years, represents highly attractive value for shareholders.

“In addition, KKR will provide support, expertise and significant investment to enable the company to move onto its next phase of development. The board is pleased that the transaction has already received written support from nearly 60 per cent of our shareholders.”

KKR declined to comment.