Kape Technologies Share Discussion Threads

[rivaldo] 13/9/2021 22:41

I posted earlier.... the RNS actually states that the placing price will be "a minimum price of 337.5 pence per share" :o))

I fully expect the share price to be EXTREMELY strong tomorrow given the transformational nature of tonight's acquisition. Combined with the fact that KAPE were already on a very cheap rating for the sector anyway, so there was already room for substantial upside.

[magic] 13/9/2021 21:45

I would be very surprised if the share price rises tomorrow.
Will the placing price be announced tomorrow?
I would think it is in the company's interest to do this.
Admission of placing and retail shares only after the General Meeting 1st October.


"It is envisaged that the Bookbuild will close no later than 7.00 a.m. BST on 14 September 2021. The results of the Placing will be announced as soon as practicable after the closing of the Bookbuild."

and

"The Placing and Retail Offer are conditional upon, inter alia, approval of shareholders being received at the General Meeting"

also

"In conjunction with the Placing, the planned Retail Offer will provide both new and existing retail investors with an opportunity to participate in the equity fundraising alongside institutional investors. A separate announcement will be made shortly regarding the Retail Offer and its terms. For the avoidance of doubt, the Retail Offer is not part of the Placing."

Additionally

"The Placing is not conditional on the completion of the Acquisition."


Invariably a placement price is below the market price.
It wouldn't surprise me if the placement price is say around 330 pence.

The sellers tomorrow might be:
- new and old shareholders hedging until the shares are listed
- some shareholders who are sceptical of acquisition, have seen share price rise a lot and want to get out
- some shareholders who may not be sceptical of the acquisition, but were comfortable with organic growth, but now uncomfortable with this different "beast"


The buyers may be:
- Individuals and others who did not participate in placing, or will be allocated less than they wished
- Possibly investors who are looking for higher risk / reward
- Possibly some US investors who can now back ExpressVPN as a quality company
- Identifying a lower valuation than equivalent US listed companies and anticipating a future US listing
- Maybe some stabilisation

It would not surprise me if the hedging predominates which could see a short term share price below the placing price.



This co is still on the AIM and this may create problems for some institutional buyers mandates. In the medium term a FTSE 250 place in the upper half would be a positive move.

All large acquisitions / mergers have execution risks and mergers often develop integration/culture problems.
There may be some hesitancy to back this company until some risks have been reduced and progress observed.


Although the company has great promise, it still "only" has £200m expected turnover in 2021 and £30m profit in 2020.

I'm in on the retail offer, watching pre and post admission opportunities, good luck everyone.

[molatovkid] 13/9/2021 21:37

Well that was unexpected!

[adamb1978] 13/9/2021 21:19

Igoe

Next 12-18 mos:

Market forecasts for '22 before today = 32 cent
Stated EPS accretion for 2022 = 28%
Implied new '22 expectation = 41 cents = 29.3p
Average PE over last few year = 18x
Implied share price = 526p

However given the growth of the business and the new league which this takes KAPE into, I think you could argue that it deserves a re-rating. Its certainly makes sense to me to hold for another 18 months IMO so that figures for the first full year of the combination are available

Adam

[igoe104] 13/9/2021 19:29

Any predictions what the S/p will finish tomorrow ?

£4.50p plus ?

[suetballs] 13/9/2021 19:16

Retail offer closed. Yes DbyD you've gotta be quick.
Suet

[death by donut] 13/9/2021 19:16

Ah found it , too late.First time ive used it.Ho hum.DbD

[rivaldo] 13/9/2021 18:54

Wow :o))

I did expect an acquisition, but didn't expect it to be for $936m.....this takes KAPE into a different league.

"Highly earnings enhancing" too.

And a MINIMUM price of 337.5p for the fundraising is excellent news.

The share price could rise sharply from here as the full impact sinks in.

Here's the SCSW tweet link btw:

[death by donut] 13/9/2021 18:46

I can't even see it on the app.DbD :-(

[tole] 13/9/2021 18:34

Are you talking about their tweet? They don't update until the newsletter release each month.After hours #KAPE , buying ExpressVPN in part funded by placing at 337.5p, doubles user base to 6m. Huge synergies from consolidating servers and duplicated costs est at US$30m. Almost 30pc eps accretive.Been a great one for GP3 which holds from 93.5p

[suetballs] 13/9/2021 18:30

I'm not a subscriber but I'm sure SCSW will be positive on the deal.
Suet

[tole] 13/9/2021 18:30

Well that didn't last long. Primary bid already closed the offer..

[mrnumpty] 13/9/2021 18:05

For subscribers , there has just been an announcement by the monthly tip-sheet Small Company Share Watch about the acquisition .

[adamb1978] 13/9/2021 17:37

I think they're sandbagging the profitability of the combination:

pre-deal expected EBITDA: $90m
Target co EBITDA in 2020: $75m
Total EBITDA of $165m....
Guidance: $166m-$172m

...however the target co is growing at mid 30%s

Look at at revenue:
pre-deal expected revenues: $245m
Target co revs in 2020: $279m
Total revenue of $524m....
...but guiding to $610m-$624m

so they seem to be factoring in growth from the 2020 figures given to the 2022 outturn to the revenue forecast, but not EBITDA.

Looks to be considerable upside to their guidance

[volsung] 13/9/2021 17:17

Looks like a nice wee offer.
In for a few

[adamb1978] 13/9/2021 17:15

28% earnings accretion is very tidy indeed. Just did some back of the envelope number and came to 26% so feels very credible

[igoe104] 13/9/2021 17:09

Looks like they have lots of costs saving, in doing this acquisition.

[adamb1978] 13/9/2021 17:04

Wonder whether this had started to leak out, and hence the share price pull back in recent weeks.

Huge deal for them though and given the share price is up 2x in the last year, not completely daft to be taking advantage of it

[suetballs] 13/9/2021 16:55

Participated for a small amount.
Suet

[the shuffle man] 13/9/2021 16:52

Sounds like an excellent deal

- Highly earnings enhancing transaction from completion, with the enlarged group expected to generate revenues for the year ended 31 December 2022 of between US$610-624 million and proforma Adjusted EBITDA of between US$166-172 million

-- Earnings accretion of c.28% anticipated for the year ending 31 December 2022

[adamb1978] 13/9/2021 16:43

As predicted - another major acquisition before year end....$936m!!

[johndoe23] 13/9/2021 16:06

P.E of 10, absolute bargain!!Interims this week, weds or Thurs?

[igoe104] 13/9/2021 15:01

Cheers Rivaldo,
A p/e of less than 10 for 2022 for a fast growing tech company is extremely cheap, and that's without taking a possible another sizeable acquisition into account. These could easily double over the next couple of years..

[middlesboroughfc] 13/9/2021 14:14

thats a mistake isnt it, they dont report in £