Renew Share Discussion Threads

[harrogate] 10/5/2018 16:37

It is not the directors interests that they have put first - they bought a few shares at a 50p discount - given the salaries they are on they didn't structure this to save themselves a few thousand. They must have done it quickly at that discount because they had to in order to get the funding and the deal done. It is the "club" as you say. This is a different management team than the one we invested in and I am not sure this would have happened this way under the old team but remember they did waste over £25m+ buying Forefront ( but did the deal of the decade buying Amco when they did). If you have doubts about the new team and their view of shareholders then sell. I am watching with great interest now for sure

[glaws2] 10/5/2018 16:36

Whilst I do not like the approach, and especially the discounted placing, I'm not sure I buy into the the "directors lining their own pockets conspiracy"; the amounts that they have subscribed to are relatively small.

[dozey3] 10/5/2018 16:26

harrogate, I share your positivity to a large extent and am also a substantial holder (for me) having started with 5k@35p in 2009. But there is no room for doubt that management have put their own interests above those of ordinary shareholders, which raises the question of what they might get up to in the future. I would have bitten their hand of to accept rights at such a ridiculous discount; as it was, the benefit was ‘stolen’ (legally apparently) from me and all other holders not in the club. Wonder what ShareSoc will have to say about it. Hope like me you are all members btw.

[harrogate] 10/5/2018 16:18

No they are not at all - they are in the business of looking after the interests of the owners of the business. If this deal works and they make 40p in 2019 and we are valued at 13 x that at £5.20 I believe they will have succeeded in that.

[wad collector] 10/5/2018 16:14

I suppose, ultimately, that Directors are in the business to make themselves money.

[harrogate] 10/5/2018 16:03

It is true that they have used what is called a cashbox method to get round the 5% limit on pre-emption as detailed above. It is all noted in the RNS. It is not unheard of and is done where speed is important as I suspect it was here. The method is certainly not in the spirit of the guidance given by the Preemption Group and so is disappointing. I am not happy as I am a long term ( 10+ years) substantial shareholder and feel there should have been a way to get us involved and cannot understand why a 14% discount was needed to fund a deal that is described as materially earnings enhancing.
Having said all that it is important to focus on the deal here - it is earnings enhancing with 2019 upped to 40p EPS and the broker says that debt will be gone by end of 2019 as well. That sounds a stretch and I agree with sharw that Numis would be positive! I have bought more at under £4 as I believe this deal drives RNWH to new ground and momentum and with Rail frameworks announced soon for 2019 we believe they should get a further push from that in terms of growth and surely they can get some savings out of the rail businesses in the next 12 months

[grahamburn] 10/5/2018 15:38

Are you absolutely sure of your facts on this?

[sharw] 10/5/2018 13:47

Of course Numis are going to be positive - they are the house brokers who engineered the legal loophole involving an offshore company which deprived you and other small shareholders of an open offer of 3 shares for every 20 held @ 355p leaving the board and their pals to get their snouts in the trough.

[rivaldo] 10/5/2018 12:34

A little more from Numis:



"Analysts welcomed the deal.

Howard Seymour at Numis said: "The acquisition of QTS provides two major positives in our view.

"First, QTS operates a similar business model to Renew (and Amco in rail) so the acquisition provides a range of complementary services and geographic potential that will offer significant organic opportunities for growth in service provision to Network Rail.

"Second, the acquisition is taking place a year ahead of the structural shift in rail spending, which will give rise to a 25 per cent increase in Network Rail operating expenditure over 2019 to 2024. "The enlarged group will have the highest relative exposure to this major opportunity of all our universe, so Renew will be the best way to invest in this area in our view."

Renew said the acquisition will increase its market share, footprint and specialist positioning in the rail market, which has high barriers to entry and the deal will add complementary services to the group's existing rail offering. It said the acquisition and placing are expected to be "materially" earnings enhancing and the return on investment is expected to comfortably exceed Renew’s cost of capital."

[rivaldo] 10/5/2018 06:51

Confirmation of Numis' upgrade to Buy and 500p target price:



"Numis upgrades Renew Holdings after acquisition

Numis Securities has upgraded engineering services group Renew Holdings (RNWH) following the £80 million acquisition of specialist rail contractor QTS.

Analyst Howard Seymour lifted his recommendation from ‘add’ to ‘buy’ with a target price of 500p, although investors took fright at the news, sending the shares 33p or 8% down at 380p.

Seymour said there were ‘two major positives’ to the deal; the first is that QTS operates a similar type of business so the acquisition ‘provides a range of complementary services and geographic potential that will offer significant organic opportunities for growth’.

The second positive is it is taking place ‘a year ahead of the structural shift in rail spending’ that will increase opex spend so ‘the enlarged group will have the highest relative exposure to this major opportunity of all our universe, so Renew will be the best way to invest in this area’."

[irenekent] 09/5/2018 17:55

Time for a shareholders revolt at the next AGM. Also, don't forget to vote against the remuneration policy. This is scandalous. Maybe the Chronic Investor should publicise this rip-off. I believe Simon Thompson is a fan of the company - maybe he could comment.

[dozey3] 09/5/2018 17:41

Thanks for that, sharw, so its legalized theft. Wonder how the directors justify it. Know what? Am beginning to think Corbyn’s Got something. Must go and lie down in darkened room.

[sharw] 09/5/2018 16:35

It has now been explained to me in another place.

Here is the legal loophole which allows you to shaft the small investors who would have benefited from the open offer required for the 15% of shares above the 5% limit had they been issued for cash:

1) set up an offshore company.

2) you and your chums buy preference shares in this company at 355p a go.

3) RNWH takes over this company in exchange for shares (RNWH shares exchanged for ordinary shares in offshore co.) - so no money changes hands.

4) the offshore company now holds the new shares and the cash. You and your chums redeem your preference shares in exchange for the new RNWH shares and the offshore company uploads the cash to its parent company.

5) you bung a big backhander to those nice guys at Numis who thought up such a spiffing way to shove two fingers up to those small private investors.

[wad collector] 09/5/2018 15:48

Good deal for the directors , though I suppose they would feel that they had to support the offer. Where is my share of the offer?

[dozey3] 09/5/2018 13:04

Well as a very long term holder I feel well and truly mugged. There is no excuse for ignoring small shareholders when already well rewarded directors get their snouts in the trough. A rights issue is fair to all and would not have been difficult to arrange. Nice cosy stitch up with Numis. Of course we private shareholders have been diluted, no question; should be illegal imo.

[sharw] 09/5/2018 12:54

Someone please tell me if I am wrong but as far as I can see this is illegal.

As I read:



there is only authority to allocate 5% without pre-emption so there should be an open offer for the remaining 15%.

[sharw] 09/5/2018 12:54

Duplicate - post appeared twice for some obscure reason

[rivaldo] 09/5/2018 12:49

Comment from Numis today, "with the company now representing the best investment option in its industry":

"0921 GMT - With its acquisition of QTS Group Limited, Renew Holdings can make the most of a planned 25% increase to operational expenditure by Network Rail--which owns and manages most of the U.K.'s railways--Numis analysts say. The brokerage says the enlarged group will also benefit from significant organic opportunities due to the inclusion of complementary services and new geographic potential. QTS Group's business model will be a strong foil to Renew Holdings' rail operations, with the company now representing the best investment option in its industry, Numis says."

[harrogate] 09/5/2018 08:37

Given the nature of Renew I would have thought they would be long term holders. Still galling though

[slogsweep] 09/5/2018 08:37

Disapponted at no rights issue but on reflection the only
time we're offered a rights or open offer is when they can't get
the issue away to their pals. I can't remember the last ime i
was offeed a rights and most of the open offers proved disappinting.

Some good may come of it will hold for now or even buy more if price falls to 355

[shanklin] 09/5/2018 08:29

I guess the question is whether some of these "new and existing shareholders" will be happy to make a quick if small turn on their £3.55 purchases and push the share price briefly down towards that level.

[harrogate] 09/5/2018 08:26

I have just increased my Renew stake as I need to see through the discount to the deal value - Numis have moved to buy and EPS for 2019 ( first full year) of 40p from 36p and are saying they expect a net cash position by end 19 even with this deal. I think it is now attractive at this stage with rail frameworks for 2019 announced this year you would have thought ( although I have no idea in truth)

[rivaldo] 09/5/2018 08:23

On reflection, the share price was around 380p-385p only a month ago. Given the size of this deal, it's likely that it's taken a while to complete. I suspect that the placing price was agreed when the deal was first mooted, when 355p wouldn't have looked unreasonable. The subsequent rise in April has left the places well placed, but Numis rather red-faced.

The acquisition does look very good. Occasionally there are situations when the share price rises nicely post-placing as demand comes in. This may well be one of those occasions if all goes well.

[harrogate] 09/5/2018 07:35

It is not dilution of 20% as the deal is materially earnings enhancing so for me the issue is more about the 14% extra discount - I think the deal is transformational for Renew with the new rail framework coming up and so I think the price could go up once the people who are a bit fed up like me (!) stop sulking. Juts look at those profit margins in the new company. It must do high quality technically more complex work than Renew I would have thought and that is great in specialist engineering

[nurdin] 09/5/2018 07:33

I am just surprised that they have to discount the placing by as much as 20% to get it away, given that it is an excellent fit to the business and materially earnings enhancing!