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UK railway privatisation, which was launched in the mid-1990s, has finally turned full circle: the Department of Transport has recently confirmed that its controversial railway franchise system will be scrapped. In this month's feature article, Nigel Hawkins, the Infrastructure analyst at Hardman & Co, examines the 25-year history of railway privatisation and chronicles its ups and its downs. The successes of railway privatisation, such as new rolling stock, are addressed, along with the many shortcomings, which included minimal vertical integration. With the winding up of the franchise system, the UK railway sector is effectively reverting to its former status as a nationalised industry, a shift started with the renationalisation of the collapsed Railtrack – later re-badged as Network Rail – in 2001.
Companies: ARBB BBGI CLIG DNL FLTA ICGT OCI PCA PIN PXC RECI SCE TRX SHED VTA YEW
Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Subject to EGM on 21st March. Rogue Baron plc have announced its application for admission to the AQSE growth market. Rogue Baron owns five subsidiaries, namely: Shinju Spirits, Inc., Shinju Whiskey LLC, Mazeray Corporation, STI Signature Spirits Group LLC and Legacy Retail Group LLC. The Company’s goal is to build each of its brands that makes them a buyout target. Deal size TBC an expected admission date 12th March 2021. Global review platform, Trustpilot has announced its intention to float on the premium list of the LSE. Trustpilot provides an open platform, which creates a place where businesses and consumers can gain actionable insights and collaborate. Consumers are able to share feedback, at any time, about any business with a website and review feedback left by other consumers. Total revenues were US$64.3 million, US$81.9 million and US$102.0 million for the years ended 31 December 2018, 2019 and 2020, respectively. The Offer would comprise new Shares to be issued by the Company (raising gross proceeds of approximately US$50 million to support Trustpilot's growth plans and repay indebtedness) and an offer of existing Shares to be sold by certain existing shareholders, directors and employees. Timing TBC. In The Style, the e-commerce womenswear fashion brand with an influencer collaboration model, announces their intention to float on AIM. In The Style is a pure-play e-commerce fashion brand with a l customer base of women predominantly aged between 16 and 35. Founded in 2013, the group has delivered £35.4 million net sales and £3.6 million Adjusted EBITDA in the nine months to 31 December 2020, with sales up 159% from £13.7 million for the nine months to 31 December 2019. Admission is expected to take place on or around 17 March 2021. Deal size TBC. Media reports video game firm, Catalis is mulling a London IPO, just over a year after being bought by a private equity firm. Catalis’s accounts are reportedly expected to show revenues increasing to £60m in 2020, up from £43m, with adjusted earnings of £15m. Deal details and timing TBC. tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo is expecting to release its IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: LND GDR GAMA SOLI SHED RLE CRU WRES SBI MNO
tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: ADME NFC CHAR WHR MKA IXI MOS D4T4 ALS TERN
Solid State is a manufacturer of computing, power and communications products, and a value added supplier of electronic components. This morning, and just two days on from its acquisition of Active Silicon, Solid State has announced the acquisition of Willow Technologies, including its US subsidiary American Electronic Components (AEC), a manufacturer and value added distributor of electro-mechanical products used in strategically important markets such as EV. The gross initial consideration paid is reported at £10.0m, which net of cash stands at £5.5m, and implies an initial c.10x net forward PER consideration multiple. On the back of this morning's announcement, we have left our recently upwardly revised FY 2021E earnings expectations unchanged and raised our FY 2022E estimate by 8.0%, again with an assumed cash consideration outflow either side of year end. We believe this latest acquisition is another positive strategic move for Solid State, expanding internationally in growth sectors, as well as bringing with it additional own brand product ranges. We view the FY 2022E PER multiple of 14.6x for Solid State as undemanding, with our estimate of fair value for the shares standing at 925p.
Companies: Solid State plc
Today's news & views, plus announcements from SMDS, PSN, POLY, RIO, BIFF, SONG, HSX, PAGE, RLE, SHED
Companies: PSN RLE RIO
Today's news & views, plus announcements from BME, AV, SDR, RAT, MGGT, GFRD, SEIT, TYMN
Companies: Galliford Try Holdings PLC (GFRD:LON)SDCL Energy Efficiency Income Tst (SEIT:LON)
Reckitt reported largely in line Q4/FY 20 results. Q4 revenue was up by 10.2%, driven by Hygiene (+25.7%). The FY adjusted EBIT came in at £3.3bn with the margin at 23.6%. The final dividend remained unchanged at 101.6p. E-commerce sales were up by over 56% (~12% of revenue). The firm confirmed M&A developments which realign its portfolio towards faster-growing markets. FY21 growth is expected at 0-2% with a 40-90bp margin contraction. We do not expect any major change to our estimates.
Companies: Reckitt Benckiser Group plc
MTI Wireless Edge Ltd* (MWE.L, 83p/£71.7m) Finals: Strength of diversified model (01.03.21) | CAP-XX Ltd* (CPX.L, 8.75p/£48.6m) Interims: Strong growth in order book and sales enquiries (25.02.21) | Audioboom plc* (BOOM.L, 430p/£67.4m) Update: Ranked 5th biggest US podcast publisher (26.02.21)
Companies: MWE CPX BOOM
The group has made its second acquisition this week, announcing the acquisition of the Willow Technologies Group for an initial effective consideration of £5.5m. It is a good strategic fit, offering a springboard into the US and enhancing the group’s existing product offering, with good exposure to growth markets. We maintain our FY21 forecasts, with a full contribution in FY22 enhancing EPS by 9.4% to 55.2p. We likewise raise our PT by 9.4% to 950p, pointing to a fair value of 17.2x, attractive compared with the current P/E of 14.4x
Solid State is a manufacturer of computing, power and communications products, and a value added supplier of electronic components. This morning, and one week on from its recent positive trading update, the group has announced the acquisition of Active Silicon, a specialist designer and manufacturer of circuit board level solutions for high-performance digital image capture, processing and transmission. The gross initial consideration stands at £6.3m; however, net of cash this falls to £2.7m, implying a net historic acquisition PER multiple of 9.0x and forward 10.8x based on our forecasts. On the back of this morning's announcement, we have left our recently upwardly revised FY 2021E earnings expectations unchanged and raised our FY 2022E estimate by 5.9%, with an assumed cash consideration outflow either side of the year end. Whilst this acquisition is relatively small, strategically we view it as a very sensible move, expanding Solid's presence through the addition of complementary technologies in a growth segment where Steatite already has an established presence. Ultimately, we view the FY 2022E PER multiple of 15.1x for Solid State as undemanding, with our estimate of fair value for the shares standing at 885p.
Accrol Group Holdings plc (ACRL LN) Bango plc (BGO LN) Brickability Group plc (BRCK LN) Norcros plc (NXR LN) OnTheMarket (OTMP LN) Ricardo (RCDO LN) UP Global Sourcing Holdings (UPGS LN) Watkin Jones (WJG LN) Xpediator (XPD LN) ZOO Digital (ZOO LN)
Companies: ACRL BGO BRCK NXR OTMP RCDO UPGS WJG XPD ZOO
Reverse Takeover by London Stock Exchange Group (LSEG.L) following the acquisition of Refinitiv in an all share transaction for a total enterprise value of approximately US$27 billion.
Companies: ADME ROCK ZPHR DKL VARE SMRT PTRO MHC BOO
Surface Transforms is now well capitalised following completion of an oversubscribed c.£20m fundraise. Management will move rapidly to develop OEM Production Cell Two to fulfil new and anticipated orders. We update our estimates for the fundraise and the revised investment programme. Sales and gross profit are unchanged, but overheads will be higher in all years reflecting the required investment in the platform to deliver for customers. 2021e will be a year of build-out; OEM orders start to flow properly in H2. The Group should turn sharply profitable in 2022e, with a further ramp-up in 2023e. With Cell Two up-and-running, factory revenue capacity will rise to £35m from £20m currently. We assume a sustainable net margin of 25%-30%, or implied profit up to £10.5m and a PE of c.14x. A fully fitted-out five-cell factory could generate up to £22.5m of net profit each year. Surface Transforms must deliver but is now well positioned for the medium-term.
Companies: Surface Transforms plc
CAP-XX Ltd* (CPX.L, 11.0p/£48.6m) | ECSC Group plc* (ECSC.L, 75p/£7.5m) | MTI Wireless Edge Ltd* (MWE.L, 81p/£71.7m)
Companies: CPX ECSC MWE
The group has announced the acquisition, of Active Silicon, a digital image processing and transmission business for an effective cost of £2.7m. It is complementary and additive to the group’s position in opto-electronics and embedded computing. The acquisition is EPS enhancing in its first year, with a 4% upgrade to 50.4p. We also raise our PT by 4% from 835p to 868p, offering decent upside to the current share price. This bolt-on acquisition should be taken well as a useful strategic enhancement to Steatite’s technical capabilities.
