BlackRock Income & Growth (BRIG) targets growth in both income and capital over the long term. BRIG has been run by the extensive team at BlackRock since 2012 which also runs a successful open-ended UK equity income product. The open-ended fund has successfully increased its distribution every year for the past 30 years. Whilst there is significant overlap between BRIG and its better-known open-ended counterpart, the managers of BRIG, Adam Avigdori and David Goldman, are keen to take advantage of the trust structure for this product. BRIG seeks to balance income generation with growing distributions, by concentrating primarily on identifying attractive opportunities from bottom-up stock analysis. The managers tend to place stocks into one of three ‘buckets’, as we discuss under Portfolio. The trust structure, and this approach, allows them to invest in lower yielding names – which they believe to have significant growth or turnaround potential – and focus on generating yield at a portfolio level. As we discuss under Dividend, the aim of generating a growing level of distribution is also supported by the board, who have looked to accrue additional revenue reserves in benign conditions whilst distributing these reserves in more challenging environments. This strategy has allowed BRIG to consistently grow its dividend, without placing excessive impediments on the managers to focus solely on dividend generation. The current level of discount (of c. 5.9%, as of 24/07/2020) is wide relative the trust’s recent history, as we discuss in the Discount section.
Companies: Blackrock Income & Growth Invt Trust
A long, long time ago, I can still remember how, that election had us all talking about sterling (well, some of us). Instead now we are hard put not to talk about mass dividend cuts, with Link Group estimating dividend cuts of 47% or more in the UK equity market. Way back in those distant epochs of early December 2019, we appeared to be approaching a greater degree of certainty about the shape of the future in the UK: an election was in the offing which promised to help resolve the outlook for our relationship with the EU and the rest of the world, and to clarify what kind of environment businesses would face going forward. At the time, GBP looked undervalued on the basis of the Economist’s ‘Big Mac’ index (a way of looking at the relative valuations of various currencies based upon the relative cost of a McDonald’s Big Mac in different countries). With signs that global investors’ positions in UK assets were starting to move towards normality from their previous large underweights, it seemed prudent to highlight that a rising currency could prove a headwind for dividend streams. With UK payout ratios (the proportion of earnings paid out as dividends) very elevated, and in general terms a roughly inverse relationship between UK corporate earnings and the strength of the currency, dividends funded by overseas earnings logically seemed somewhat vulnerable. Sure enough, following the general election we saw the GBPUSD rate move up to c. 1.35 in fairly rapid fashion (having traded below 1.30 since May 2019). Even so GBPUSD remained short of the ‘fair value’ level of c. 1.42 suggested by the ‘Big Mac’ index at the time, but there were certainly positive signals in sentiment surveys that suggested sterling was setting up for a more durable rally.
Companies: TIGT ASEI JCH CTY DIG SCF BRIG ASL
BlackRock Income & Growth (BRIG) targets growth in both income and capital over the long term. With an extensive team that also runs a successful open-ended UK equity income product, BlackRock have been running BRIG since 2012; the open-ended fund has successfully increased its distribution every year for the past 30 years. Whilst there is significant overlap between the trust and its open-ended relation, the managers, Adam Avigdori and David Goldman, are keen to take best advantage of the trust structure for this product. The managers have greater scope to invest in smaller, less liquid names, enabled by the closed-ended structure and relatively modest size of BRIG’s assets (c. £50m) enables, balancing opportunities for both capital and income growth - read a detailed overview of BRIG's portfolio construction. Income is an important feature of the trust, but the management team are equally concerned with growing distributions as with providing a headline yield. Whilst the portfolio’s overall level of income is considered important, not all stocks are expected to contribute to it. The managers seek to run a concentrated portfolio of around 40 stocks, and to ensure that stock-specific factors are the main driver of returns. Portfolio construction places stocks into three ‘buckets’: Yield & free cash flow opportunities; Growth opportunities; and Turnaround opportunities. The portfolio is heavily weighted towards the first category, but around 20-40% will be held in the latter two buckets, which the managers believe can help drive capital growth. Recent performance has improved, driven in large part by stock-specific factors, with previous sector headwinds proving less of a factor in 2019 thus far. BRIG has successfully grown its dividend under the stewardship of Adam and David, with total growth significantly outstripping inflation since BlackRock took over management of the trust. The present yield of c. 3.6% is well covered, with sizeable revenue reserves. Click here to find out more about the trust's dividend policy. The board operates an active discount control policy, looking to buy back shares tactically when the trust is trading on a discount to net asset value (NAV), and reissue them from treasury when the trust is at a premium. This has helped contribute to reasonably constrained discount volatility, as we discuss in more detail here.
All leaderships come to an end at some point. With investment trusts, however, it is rarely the electorate (aka shareholders) who initiate the change in manager. In some cases it is the board. In others, it is the management company itself recognising the need for a new manager, and replacing them before the board feels the need for more decisive action. A change instigated by the board will often result in a transformative outcome for a trust, perhaps with a change in management house as well as personnel. Changes proposed by the management company itself can be just as transformative, but can also be subtler. The aims are always the same: to improve performance for shareholders, and to stimulate demand to bring in the discount, or grow the trust through share issuance. Last week witnessed one of the more dramatic changes of manager in recent years. On 29 November Baillie Gifford effectively took control of the portfolio of European Investment Trust, one of the last remaining value trusts in the sector. The mandate being awarded to Baillie Gifford (the pre-eminent growth investment house) represents a significant change for shareholders, and comes after several years of a growth bull run. Time will only tell whether the board’s decisive (and dramatic) switching of horses will prove correct. In this article we reveal the results of a detailed analysis on how effective past manager changes have been for investment trusts.
Companies: JAM BRNA BRIG MWY
It used to be said that in central London you were never more than six feet from a rat. Nowadays, the saying has been updated: you are never more than six feet from a Pret-aManger. Before Pret came McDonald’s, serving the same burgers in the same buns from London to Tokyo. Such was the ubiquitous nature of the fast food giant that in 1986 The Economist launched the ‘Big Mac Index’. Presently, this famous index of relative currency strength suggests sterling is seriously undervalued [1] . Sterling has certainly been weak since the 2016 Brexit referendum, and remains c.12% below its level on the day before the Brexit vote. Yet it has climbed c.8% from its lowest point in August (as of 26 November) as a no-deal Brexit appears to be off the table. We believe a more sustained rebound in the currency could be on the horizon – at least, assuming the Conservatives win the general election. This could be good news for those owning UK assets but, for UK companies with overseas earnings, it might make meeting and growing dividends more challenging. For UK large-caps in particular, a further rise in sterling could lead to dividend growth being weak, given the large proportion of those companies’ earnings are derived from overseas. Open-ended equity income funds will have no protection against this, but it is exactly the sort of environment where the closed-ended structure can shine. By being able to build up revenue reserves, investment trusts have the ability to build up a safety net against this sort of eventuality, as we discuss below.
Companies: SCF JCH BRIG CLIG ASEI
BlackRock Income & Growth (BRIG) has twin aims of providing a rising dividend, but also growth in capital over the long term. Whilst BlackRock has only been running the trust since 2012, the team behind it has a much longer pedigree. They have run the same investment process for over 30 years, and (according to BlackRock) the BlackRock UK Income fund holds the impressive record of being the only UK OEIC that has increased its distribution each year for 30 years. Speaking to co-manager Adam Avigdori recently, he commented on how well suited the trust structure was to their approach. He highlighted that a closed-end fund puts a manager in an ideal position to take controlled risk, and allows them to have strongly held views through a cycle. He feels this aids their investment approach, and together with the relatively small size of the trust currently (£46m of net assets) gives them a competitive advantage over peers, with huge flexibility to buy or sell companies of all sizes. As such, Adam believes BRIG is an ideal vehicle to deliver dividend growth for investors. As we discuss below, since 2012 the team have grown the trust’s dividend by 4.7% a year and built up a reserve equal to a year’s dividend. Adam and David employ a high-conviction approach to stock picking, with the portfolio expected to have between 30 to 60 holdings at any one time - currently numbering 43. The team buy companies purely on an opportunity led basis, but try to provide some diversification across the portfolio through allocating across three “buckets”, defined by the broad type of investment opportunity. Yield and free-cashflow is typically expected to be the biggest allocation, of between 60-80% of the portfolio, currently 68%. The team also look for growth opportunities, expected to be between 10-30% of the portfolio, currently 23%. The final bucket is turnaround situations, expected to be between 0-10%, currently 9%. A key differentiator to many other competitor funds and/or trusts is the multi-cap approach. Using the advantages conferred by the closed end structure and the relatively small size of the trust, the team opportunistically venture into the small and mid-cap (SMID) sphere where they have particularly high conviction – with no official maximum weighting. Currently c.18% of the portfolio is in SMID stocks, mostly found in the growth bucket of the portfolio. Performance over the past five years is impressive, with the trust c.8% ahead of the benchmark but also beating the average investment trust peer by 4.6% and the average open-ended peer by 10.6%. 2014 and 2015 were both very strong years of outperformance, but 2016 proved to be a more difficult environment – with miners rallying hard – an area which the managers have had a long term underweight. Over the past 12 months (to 23 May 2019), BRIG is behind the FTSE All Share by 0.6%. Several stock specifics impacted the portfolio last year, which have so far more than been made up for by calendar year performance to date. Outside of total returns, BRIG’s raison d’etre is to provide a growing dividend over time. As such, since being awarded the mandate in 2012, the BlackRock team have grown the trust’s dividend by 4.7% a year and built up a reserve equal to a year’s dividend. The trust’s headline yield of 3.7% is modestly lower than the UK Equity Income sector weighted average of 3.9% (source: JPM Cazenove). This reflects the manager’s desire to deliver sustainable dividend growth over time, which is evidenced by the impressive earnings growth delivered by the portfolio since BlackRock took over management of 7.7% pa. The board has been employing an active discount control mechanism for over five years, and the discount currently stands at a historically wide level of 5.6%. Over time, discount volatility has been relatively low, with the trust’s discount having been broadly in-line with the UK Equity Income sector.
Today, we introduce our investment trust ratings. According to the quantitative screens we have selected in an attempt to highlight the best performers in the closed-ended universe, the trusts discussed here have been the best in their classes over the last five years. We have selected trusts using two different sets of criteria, aiming to identify the top performers for capital growth and for achieving a high and growing income. There are many rating systems for open-ended funds, but no quantitative-based system for investment trusts that is available to the average investor. While we cannot identify trusts which will perform well in the future – past outperformance is no guide to future out-performance – we hope these ratings will highlight the outstanding performers in the closed-ended universe and those managers who have best used the advantages of investment trusts to generate alpha. We are trying to reward consistent and long-term outperformance, and so we have decided to look over a five-year period. All data is as of the end of December 2018, sourced from Morningstar and JPMorgan Cazenove. We have looked at NAV total return performance and discount value has not been considered: the aim is to identify those trusts which have performed the best rather than highlight bargains.
Companies: IPU FAS ATR JEO FEV FGT THRG SEC PAC BRSC IAT HNE MIGO TRY JMG DIVI SLS BGS SDP JETI SOI BCI MRC TIGT EDIN JAGI BEE SDV BRIG AAIF HFEL SCF SIGT BRFI IVPG CTY HINT JCH NAIT
BlackRock Income & Growth (BRIG) has twin aims of providing a rising dividend but also growth in capital over the long term. The managers have an over-riding focus on earnings growth and free cashflow. In their view, free cashflow is the fundamental backdrop for sustained dividend growth. They don’t want to see portfolio companies paying dividends “at all costs”, as they believe often this will be at the expense of future growth. The managers employ a high-conviction approach, with the portfolio currently numbering 43 stocks. A key differentiator to many other competitor funds and/or trusts is the multi-cap approach. Using the advantages conferred by the closed-end structure, the team opportunistically ventures into the small and mid-cap (SMID) sphere, where they have particularly high conviction (currently 27% of the portfolio is in SMID stocks). Whilst BRIG itself is relatively small with total assets of £54m, the mangers also run the £400m open-ended BlackRock UK Income Fund. The team’s portfolio turnover of c 40% p.a reflects their view that they have the best of both worlds - the luxury of being nimble, but with the huge resources of BlackRock behind them. BRIG’s key differentiating factors relative to the OEIC is the gearing facility, and an extended ability to buy small-caps. Having formally ratified the investment process in 2013, the team got off to a very strong start outperforming the benchmark by a considerable margin over the first couple of years. In 2016 they gave back some of this performance thanks to their underweight in miners, but since then have broadly kept up with the benchmark – not a mean feat given its strength. At the time of writing, the shares yield 3.3%, which is below the average of the peer group. However, in terms of revenue generation, the team has generated earnings per share growth of 8.7% per annum since being awarded the mandate. The team believes that this is testament to their focus on cash generation, robust balance sheets and trusted management to ensure the long-term sustainability of the dividend. As a result, since 2012 the board has been able to pay a rising level of dividends, delivering a compound annual growth of 4.7% and at the same time, building up significant revenue reserves which (as at the last report and accounts) constitute a year’s dividend (6.6p per share). This means that the board has plenty of room for manoeuvre should the portfolio suffer an earnings shock. The board has run an active discount control mechanism since 2013, which has resulted in relatively low discount volatility. As such, the trust typically trades close to NAV, and currently stands on a discount of 2.1%.
Income has for a long time been top priority for British investors, stripped of the traditional source of income that a savings account once represented by a decade of negligible interest rates. But with bonds in a parlous state and the wheels finally coming off the buy-to-let bubble, the range of options available is increasingly narrow. Equities have for some time now been the beneficiary of this search for yield and equity income funds have done very well on the back of this, attracting huge inflows. However, as we have highlighted in the past, many of them are investing in just a small range of companies and those companies are themselves increasingly stretching for yield - putting this refuge for the income seeker on somewhat thin ice. With all this behind us, and mounting uncertainty about the current rally in front of us, where then is a sensible place to find it?
Companies: JCH IVI EDIN BRIG IVPU SOI BEE
Using a total return investment philosophy, BlackRock Income & Growth aims to provide growth in capital and income over the long term by investing in a portfolio of principally UK-listed equities. The managers set out their investment philosophy clearly in mid2013, and have followed the same process continuously since then. Whilst there has been some turnover in the “lead-manager” position, there has been continuity in the approach of the 13 managers contributing to the process. The team operate with a relative concentrated portfolio, currently 46 names with slightly higher turnover than average, reflecting the team’s rigid active investment process and price targets. Currently, the portfolio is biased towards high-quality stocks that are delivering strong free cash flow via sustainable, organic means. In addition, 20% of the portfolio is invested in ‘growth’ names, and 10% in what the team view as ‘turnarounds’. Whilst BRIG itself is relatively small with total assets of £55m, the mangers also run the £400m open-ended BlackRock UK Income Fund. BRIG’s key differentiating factors relative to the OEIC is the gearing facility, and an extended ability to buy small caps. Having formally ratified the investment process in 2013, the team got off to a very strong start outperforming the benchmark by a considerable margin over the first couple of years. In 2016 they gave back some of this performance thanks to their underweight in miners, but during 2017 have broadly kept up with the benchmark. At the time of writing, the shares yield 3.4%, which is below the average of the peer group. However, the board have built up revenue reserves of 1x the dividend, which potentially puts the trust in a good position given the ambition to consistently grow the dividend over time. The team have grown the distribution of their open-ended fund ahead of inflation for over 30 consecutive years now. The board have run an active discount control mechanism since 2013, which has resulted in relatively low discount volatility. As such, the trust typically trades close to NAV, although currently stands on a discount of 5%.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Blackrock Income & Growth Invt Trust. We currently have 12 research reports from 2 professional analysts.
The lockdowns continued to weigh on the top-line performance, but the state’s supporting measures have proven so successful that the quarter enjoyed provision recoveries and the cost of risk is expected to almost fully normalise as soon as this year. However, 2021 will remain a transitory year as the top-line is expected to recover only progressively.
Companies: Lloyds Banking Group plc
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. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” 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. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions. In FY20 the Group delivered pro forma revenue of £52.3m, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3m pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected 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 £5 million. The Placing will be priced on a pre-money valuation for the Company of £7 million. Targeting March Admission. Virgin Wines UK Plc recently set out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Deal details TBC but media reports suggest a £100m valuation. Targeting 2nd 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: SBI OCI IDOX ROL JAN BSE PXS SHED TSG KDNC
Aviva continues to execute rapidly its strategy, leaving France and Turkey. In the last few months, the insurer has realised six transactions. The cash will be used to improve business in the targeted markets (the UK, Ireland, Canada), reduce debt (£1.5bn in 2022) and to distribute a dividend to shareholders (14p per share to be proposed at the upcoming General Meeting).
Companies: Aviva plc
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 £7 million 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. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” 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. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions . In FY20 the Group delivered pro forma revenue of £52.3 million, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3 million pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected 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. 4basebio UK Societas is a specialist life sciences group focused on therapeutic DNA for gene therapies and DNA vaccines and providing solutions for effective and safe delivery of these DNA based products to patients. The Company has been divested from 4basebio AG , a German company listed on the Prime Standard segment of the Frankfurt Stock Exchange . No capital to be raised on Admission. Anticipated market capitalisation on AIM Admission: £14.53m.
Companies: SAR PAF PTRO NEXS TYM BOD CLX FAB ODX DUKE
Duke has announced a new royalty partner with a £6.2m financing agreement. Meteor HoldCo Ltd, trading as Fabrikat, is the largest independent provider of street lighting columns and guardrails in the UK. It is a classic Duke royalty partner given its longstanding track record of profitability, stable uncorrelated returns and use of funds to pursue an MBO. For Duke, it provides a low-risk royalty at an attractive rate, redeploying capital from recent exits into a new name with up to 30 years of payment. The stock still trades at an unwarranted discount to book.
Companies: Duke Royalty
Strong portfolio growth continues, providing increased diversification and economies of scale. The proceeds of October’s highly successful £200m equity offering were swiftly deployed by January and including subsequent investment are now effectively fully deployed, including leverage. With leading supermarket operators providing a strong tenant covenant and 100% of store rents received in advance as expected, there has been no pandemic interruption to inflation-linked dividend growth.
Companies: Supermarket Income REIT Plc
Urban Logistics REIT has announced a further 6 acquisitions deploying £28m at a 6.87% NIY. All assets have good long term rental profile with strong tenant covenant, but also potential for active management. These acquisitions represent good progress towards full deployment. We already assumed that all available capital would be deployed by the end of FY21e (Y/E March) and estimate only ~£50m remains. With a 2.1% discount to NAV and a 6% yield on annualised metrics, we think this remains attractive given tailwinds in the space and opportunity for value add through active asset management across the portfolio.
Companies: Urban Logistics REIT plc
Today's news & views, plus announcements from FRES, 3IN, BRW, LMP, RLE, KETL, SUP, WHR
Companies: Real Estate Investors plc
With a highly encouraging 3p (+78% YoY) Q1 dividend announcement yesterday, we upgraded our forecasts meaningfully, by 7%/ PBT and 8% / EPS, taking our cue from a strong start to FY2021E on top of an excellent FY2020E (results next month). JIM provides a cost-effective and efficient trading offering alongside an outsourced settlements and administration operation mainly for wealth managers, including IHT and pension schemes, fund managers and stockbrokers. The two sides of the business are very complementary, not least since both operate from a carefully managed cost-base, resulting in excellent operational gearing characteristics as new revenues drop through to the bottom line. During 2018-19, the company took decisive action to re-base fees following new regulatory requirements, while continuing to keep a tight rein on costs. JIM is cash-generative and new “Model B” outsourcing wins are a regular occurrence, lending further actual and potential upside to the shares, which sit some 34% below our fair value estimate.
Companies: Jarvis Securities (JIM:LON)Jarvis Securities plc (JIM:LON)
Marlowe used its recent Capital Markets Day to map out a path to more than doubling the group's revenue over the next three years to £500m, and expanding its Adj EBITDA margins from c15% to c20%. Trading for FY21E was confirmed to be at the upper end of consensus forecasts. Durable structural growth drivers are supporting underlying market growth of c3-4% per annum, with Marlowe expecting to outperform this organically by several percentage points, aided by its superior ‘one-stop shop' solution. We upgrade our forecasts, with FY22E Adj EPS up 8% to 31.5p. Trading on a FY2 EV/Adj EBITDA multiple of 13.4x, Marlowe's valuation is at a c10% discount to peers, despite its higher growth rates. We reaffirm our Buy rating.
Companies: Marlowe Plc
NextEnergy Solar continues to show that it can deliver in terms of generation with the company continuing to show positive year to date outperformance on top of strong irradiation. The company continues to lead the transition to subsidy free assets and remains on track to hit its target of 150MWp during FY 22.
Companies: Nextenergy Solar Fund
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. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” 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 £5 million. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Virgin Wines UK Plc recently set out their plans for an AIM IPO. Virgin Wines is a direct-to-consumer online wine retailer that sells products to retail customers in the UK through two subscription schemes and a pay-as-you-go offering. The Group also sells a range of beers and spirits and operates a B2B sales channel for corporates. Deal details TBC but media reports suggest a £100m valuation. Targeting 2nd 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: CCS OKYO SML BEG SBIZ GDP SGM SEN AMO KZG
Foresight Solar Fund (FSFL) has consistently delivered on its investment objective from its launch in October 2013. It is the largest UK solar player and provides investors with a covered, sustainable and growing dividend, underpinned by subsidised assets in the UK and high-return growth opportunities globally. This continued during the fund’s arguably most challenging few years, amid declining power prices and the COVID-19-triggered economic shock. The solar industry’s growth potential remains huge. The IEA estimates that solar capacity needs to quadruple in the next decade globally (a 20% CAGR) to limit global warming to 1.5°C. The UK’s solar capacity is forecast to more than double within the next 10 years.
Companies: Foresight Solar Fund
I once sat through a three-hour performance of Samuel Beckett’s Waiting for Godot at the Theatre Royal which, despite the best efforts of Ian McKellen and Patrick Stewart – both of whom I like very much – to this day remains one of the dreariest experiences of my life. It is on that note that we welcome 2021, with all the promise it holds, and return to our ‘top picks’ for 2020, a year which is probably best summarised (for those of us lucky enough to have been not directly impacted by the virus) by the Lord Chamberlain’s censor in his review of the first performance of Godot in 1955 – in which he described having to ‘endure hours [and hours] of angry boredom’. As always, these ‘picks’ do not represent advice, and should in no way be relied upon as such; they have been chosen on a lighthearted basis with no thought given to their suitability for your personal circumstances.
Companies: TFG IPU IEM HOT OCI BRWM JRS RICA BHMG BRLA JMI GPM MINI SMT
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 £7 million 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. Cellular Goods a UK-based provider of premium consumer products based on biosynthetic cannabinoids announced its intention to join the main market (standard) this Spring. Target valuation £20m raising c. £8m “to finalise the development and launch of a range of the Company's premium-quality consumer products based on biosynthetic cannabinoids, which is fully compliant under UK law.” Kanabo Group (RTO by Spinnaker Opportunities SOP.L) on the main market (standard). Raising £6m, enlarged mkt cap £23.4m. Kanabo focuses on the distribution of Cannabis-derived products for medical patients, and non-THC products for CBD consumers . Due 16 Feb. 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. Auction Technology Group is considering an IPO on the Main Market. The Group operates six world-leading online Marketplaces and proprietary global auction platform technology for curated online auctions . In FY20 the Group delivered pro forma revenue of £52.3 million, supported by notable underlying year-on-year growth from both Standalone ATG Group and Standalone Proxibid Group (12.4 per cent. and 40.4 per cent., respectively). For the same period, the Group delivered a strong profitability performance of £22.3 million pro forma Adjusted EBITDA representing a pro forma Adjusted EBITDA margin of 42.6 per cent. Expected 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. Cordiant Digital Infrastructure to admit its shares on the Specialist Fund Segment of the Main Market of the London Stock Exchange . Targeting a £300m raise. Cordiant invests in global infrastructure and real assets, running infrastructure private equity and infrastructure private credit strategies through limited partnership funds and managed accounts. Due 16 Feb. 4basebio UK Societas is a specialist life sciences group focused on therapeutic DNA for gene therapies and DNA vaccines and providing solutions for effective and safe delivery of these DNA based products to patients. The Company has been divested from 4basebio AG , a German company listed on the Prime Standard segment of the Frankfurt Stock Exchange . No capital to be raised on Admission. Anticipated market capitalisation on AIM Admission: £14.53m. Due 17 Feb Cornish Metals (TSX-V: CUSN) intends to list on AIM. The Company is proposing to raise £5m by way of private placement of new Common Shares to advance the United Downs copper-tin project. The Company expects that Admission will become effective 16 February 2021. The Company's Common Shares will continue to be listed and trade on the TSX-V in Canada. Raising £8.2m. £18.7m mkt cap.
Companies: OHG MDZ PEG IQE RBN WHR HMI ANIC KOD GMR
