I think they're already doing that slowly. I wonder if they'll tender any shares. |
Thinking out aloud, Dbay could take out LDG at 19p and only need to find 20m in cash to pay for it as they could use the 44m currently in the bank. They would take the 4p extra in the NAV and see an immediate 17percent return. I'd be up for that. |
They will only have 19m cash after the tender offer, so may have enough for 1 more deal, but agree patience will be required |
Good morning lpavlou and all. If they can do a few more profitable deals then that may well move the share price northwards? Further deals are surely in the pipeline? Patience is necessary. Have an enjoyable day all. ALgent. |
NAV is now 23.5p, of which 8p is cash and the balance will be 3 soon to be unlisted investments. Question is what happens to the share price once the tender offer closes. Quarterly NAVs are fine, however whats going to drive the SP? |
Morning jim and all posters. I'm tempted to buy a few more myself with a view to holding on to see how DBay do going forward. Is it agreed they've not done too bad so far? Perhaps they're not really wanting to distribute cash now. Rather they'd like to be using it to fund other acquisitions? It's hard to know. However, I'm thinking also of accepting the tender to get some cash back. Any views on whether to tender or not?
I'm looking forward to seeing what they do next. As I believe I've said before they are probably a bunch of smart operators who, in making making money for themselves, will make some for us shareholders. A pleasant and warm weekend to all. ALgent. |
Bought more, although so many shares are at a large discount to NAV atm, I'd have thought the price would have moved closer to the mooted tender amount. |
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Yes
Tender offer price is too low imo |
Great news on 2 fronts. LDG now have a 4m paper profit on their APH stake as opposed to yesterday where they were holding a paper loss of 8m, which is worth 2p on the NAVLDG not putting any more cash into APH, which will still leave £19m post tender. |
Back of the envelope nav must be about 25p post tender and bid price for alliance pharma |
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Happy New Year |
Thx a lot JakNife.
So If your educated guess is correct (which i think it is ) , the value for LDG will increase with every year the debt is paid off through finsbury.
Things like this have to be disclosed in my opinion.
Wouldnt be surprised If somtehing similar will happen at SQLI |
 kirmich,
"I still struggle with the value of the Finsbury stake. Apparently according to the article they own 27,5% of Finsbury Foods, valued at 17,8 million. But in the same sentence he mentioned the takeover in 2023 was at a value of 143 million pounds."
From the annual report:
"During the financial year, the Company held 16,140,365 shares (12.4%) of Finsbury Foods Group Plc (“Finsbury”). Finsbury operates a speciality foods business which supplies boxed cakes to supermarkets located throughout the United Kingdom. Products include novelty and celebration cakes, chocolate cakes and other bakery goods. In September 2023, Frisbee Bidco Limited and Finsbury reached an agreement on the terms of a recommended cash offer at 110p per ordinary share of 1p each in the capital of Finsbury, to be effected by way of a scheme of arrangement. On 3 November 2023, the Company noted that the requisite majority of Finsbury shareholders had voted to pass the resolution to approve and implement the scheme of arrangement. Post transaction, the Company owns 27.5% of Finsbury, which delisted from AIM on 17 November 2023."
see:
Note also that the accounts refer to LDG as owning shares in Frisbee Topco Limited, which in turn owns Frisbee Bidco Limited.
At a guess the reconciliation of the numbers is:
1. 16,140,365 shares of Finsbury Food Group (FIF) at the takeover price was worth £17.8m (16.14m shares x 110p).
2. LDG contributed those 16.14m shares to Frisbee Topco Limited in return for an equity stake of 27.5% in Frisbee Topco Limited, valuing Frisbee Topco Limited's equity at £64.7m (£17.8m / 0.275). These shares would then be transferred down to Frisbee Bidco Limited.
3. The missing factor must be that DBAY financed Frisbee Topco Limited with equity *AND* debt in Frisbee Topco Limited.
After the deal DBAY must have 72.5% of Frisbee Bidco Limited, valued at c. £46.9m and £78.8m of debt.
Otherwise I agree that the numbers wouldn't add up!
I would also bet that DBAY transferred the debt to third party banks and hence levered up their stake.
JakNife |
I still struggle with the value of the Finsbury stake. Apparently according to the article they own 27,5% of Finsbury Foods, valued at 17,8 million. But in the same sentence he mentioned the takeover in 2023 was at a value of 143 million pounds.
How come the value of Finsbury foods for LDG is only 17,8 million? Anybody had the answer? Doesn't claim it's not correct what he says, I just don't understand the math.
In the latest interims the 27,5% is quoted :
Finsbury Food Group (“FinsburyR21;) is a speciality bakery business, producing and selling high-quality bread and cakes to food retailers and foodservice markets across the UK and Europe. Its product portfolio consists largely of either essential bakery products (e.g. organic & artisan bread, buns & rolls) or event-related purchases (e.g. brand licensed celebration cakes for parties, especially for children). The Company owns 27.5% of Finsbury through its interest in Frisbee Bidco Limited (an entity ultimately owned by funds managed by DBAY Advisors Limited (“DBAY”)), the Company’s investment manager), which acquired Finsbury in a take-private transaction that completed during November 2023.
and a bit below, also in the interims :
(ii) Fair value of the investments – the Directors have recorded the current period investment in Fixtaia at fair
value. All investments have, to date, for structuring purposes, been held by Fixtaia. The fair value at the end of
the period has been calculated on the basis of the net assets of Fixtaia. The net assets of Fixtaia mainly consist
of investments in listed entities, together with 2 private companies and cash/cash equivalents. The listed
investments are carried at the quoted price as at 31 May 2024. Given the take-private transaction of Finsbury
Food Group Plc (“FinsburyR21;), the Board have concluded that the take-private valuation of 110p per Finsbury
share is fair and reasonable and should be retained at 31 May 2024 for Frisbee Topco Limited, in line with the
DBAY Advisors valuation policy. |
Re-tipped by Simon Thompson
A tender offer worth exploiting
- Investment company will buy back 21 per cent of its shares at a 31 per cent premium
- Investment sold at 31 per cent premium to book value
- £21mn tender offer pitched at premium to share price
- Spot net asset value (NAV) around £113.4mn (21.6p)
- 33 per cent discount to NAV
Logistics Development Group (LDG:14.5p), an investment company managed by asset management firm DBay, has sold an investment at a 31 per cent premium to book value and plans to return £21mn of cash to shareholders, subject to their approval. The distribution will be made through a tender offer at 19p a share, representing a 31 per cent premium to the current share price.
In February 2024, LDG acquired a £10mn (1.9p) high-interest payment in kind (PIK) fixed-rate unsecured loan note issued to The Power of Talent Midco, a special-purpose vehicle that owns the operating companies of unlisted company Nash Squared Group, a recruitment and consultancy business. Following the sale of Nash Squared's NashTech division a fortnight ago, the loan note was redeemed for £13.1mn to generate an internal rate (IRR) of 36 per cent during LDG’s 46-week holding period. LDG now holds £44mn (8.4p) of cash, of which half will be returned through the tender offer, details of which will be announced shortly.
Moreover, the board intends to return 50 per cent of net cash profits from future divestments as additional distributions. Bearing this in mind, the portfolio includes a 13.2 per cent stake in Alliance Pharma (APH:45.7p), a distributor of consumer healthcare and pharmaceutical products. The holding was worth £25.2mn (4.8p) when I last suggested buying LDG’s shares at 11.75p (‘Wind-down request could narrow this stock's discount’, 5 September 2024), but is now worth £32.5mn (6.2p). Effectively, cash and the holding in Alliance Pharma back up 100 per cent of LDG’s market capitalisation of £76mn (14.5p).
Unlisted holdings in the price for free
In addition, LDG holds two unlisted investments: a 27.5 per cent stake worth £17.8mn (3.4p) in Finsbury Foods, a bakery manufacturer that was acquired in 2023 for £143mn by funds managed by DBay; and a 9.1 per cent stake in SQLI, a leading pan-European digital transformation business.
In November 2024, funds managed by DBay bought out the minority shareholders of SQLI at €54 per share. The takeover valued SQLI at €252mn (£209mn) and implies a £19mn (3.6p) read-through valuation of LDG’s retained holding, representing a 32 per cent premium to the carrying valuation in LDG’s last accounts.
LDG’s board now plans to publish quarterly net asset value (NAV) estimates, so offering investors greater transparency. In the meantime, I estimate that spot NAV of £113.3mn (21.6p) is 14.4 per cent higher than in the 2024 interim accounts and almost 50 per cent higher than the current share price.
Furthermore, the tender offer will redeem 21 per cent of the 524.3mn shares in issue at a 31 per cent premium to the share price, so it should placate shareholders who failed in their attempt to wind down the company last year. Also, pro-forma NAV per share rises to 22.3p post the tender offer, so there should be further capital upside potential for this constituent of my 2023 Bargain Shares Portfolio. Buy. |
Same here. Hopefully it will payoff. |
No surprise some PIs are selling out now given the recent share price rise. There is still inherent value here so I'm going to be patient here. |
Be interesting to see whether they have come to a compromise with RG and ORA re distribution policy. There is a decent argument to say LDG is subscale and distributions going forward dont exactly offer huge further returns and so the discount will continue. RG and ORA could not tender at all and boost their holdings to in excess of DBAY blocking stake and then be primed to vote to wrap the whole thing up. The fun and games have just started. Circular will shed a lot more light. |
Good afternoon all. lpavlou makes the very important point that Dbay are not running the show for us but for themselves. I follow these guys and what they do to make money for myself. All shareholders should have a similar understanding in my opinion. This is the Stock Market after all! ALgent. |
KirmichI'm not sure Dbay would want to take out LDG as they in essence control them and are able to use them to fund some of the equity in their deals. If they were keen then most shareholders would have accepted a buyout at say 17p last week. Be under no illusion, Dbay are only in it for themselves. Be interesting to see if part of the tender offer is a condition that they get another waiver. Would shareholders vote that down again or take 19p for 20percent of their shares. |
lpavlou,
I do think this is a first step by Dbay and I do think the final step will be the takeover of LDG by Dbay. They first upped their stake through the buybacks. I do think they made a (rare) tactical error of trying to get as much shares as possible on the cheap (which is ok) and even stopping the first buyback (which was the mistake). I'm sure they were convinced a second buyback could be started at any time and would have been welcomed by all shareholders. That proved to be wrong.
Now I do think this is their second attempt at getting as much shares as possible at 19p, so I do think they won't tender their shares, but I also don't think Richard Griffiths will tender a share.
Check out how Dbay purchased SQLI or Finsbury, I do see this as the way forward. In the end, my assumption is they will get a deal with Richard Girffiths, but I don't think this will be the time he steps out.
We'll see how this plays out. Much more fun to watch this in the green than at a loss. As this is a big position (at 12,1 average) for me, I'll be following closely.
Happy holidays |
Dbay control FF and SQLI. It's going to be difficult to sell their APH stake unless there is a bid or they buy it out. If they were going to bid for APH, why distribute £21m to shareholders when they could have used £40m towards a buyout. I reckon they will ask shareholders if they want to sell 20 percent of their stakes at 19p but how do they maintain the share price at this new level and so it doesn't drop back to 10p once this tender is over |
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Merry Christmas everyone |
21 million quid at 19p a share works out at about 110 million shares, roughly 20% of current share capital.
Quarterly unaudited NAV is long overdue. |
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