They have bought 17% more of LEBC at an implied total value of £40m for the business.
It is current in the books at an implied total valuation of £30m!!
I have every confidence in the BPM team not to have over paid so can only conclude that a TEV of c.£40m is the current market value. This is no surprise given the increasing valuations with quoted competitors of LEBC.
BPM now owns 60% of LEBC so in effect this adds £6m to BPM's NAV - thats 20p.
So with huge improvements at NEXUS and SUMMA as well. It takes little imagination to see an NAV of 300p for BPM within 12 mths.
well its interesting that they had to pre-announce last week on leakage of this deal and the fact that the deal is seen as so positive as to bring in significant buyers over the last couple of weeks.
to me what seems most significant , is not that, BPM is investing 6m USD in a group of top experienced professionals into a fragmented market which will no doubt make money and the mgt team have significant ambition. To me, the most pertinent fact is that BPM are there at all! Such a top mgt team hardly need BPM's money so BPM must be at the table because they are either bringing expertise, introductions, or connections. These are much more an indicator of BPM potential over the medium term that the direct merits of this deal alone.
the article in the ic today was positive as expected but there were a couple of very nice extra bits of information not covered in the RNS
1 - CEO said that they had recevied several offers for LEBC which were way above current NAV
2 - ST cites recent industry valuations that are at much higher multiples than valuations of investee companies in BPM balance sheet
3 - there are a couple of exciting "events" due to happen in the next couple of weeks. i thought the use of the word "event" was very interesting as it would have been the assumption, and most obvious, to use the word acquisitions, or investments. So I would deduce that the word "event" means either there will also be a disposal or capital reduction or special dividend etc...
time will tell.
also surprising that 90k traded today and no share price movement - who could possibly be selling and who is wanting to buy such a large volume when the free float is soo small.
long term record of 12% p.a. returns and now sitting on 30m CASH, 7m of loans and 7m of Treasury investments as they say they have momentum and a good pipeline of opportunties.
they have 3 big investments which seem rudently valued. indeed Summa seems very lowly valued at a P/E of c.5t when recent trasnactions are at 10t. so that is some NAV uplift kept for a rainy day.....
i also like the deferred tax provision.
if they do have a bad investment the loss will be offset by reducing the deferred tax liability.
so it seems like a double discount which is a double bonus when the track record is so good for so long.
RNS just out ....
following the disposal of Besso and CASH rec'd
- the group now has something like £25m in CASH (90p per share).
They see a good pipleine of opportunities but also committed to reducing the discount to NAV.
NAV is currently at least 270p so at 190p the discount is 30%.
A price of 202p is needed to get the discount to 25%.
So there will be a strong buyer in the market up to 202p,
and this price can be expected to increase when next results announced,
and NAV increases.
Its not going to set any portfolio alight,
but seems certain 10% upside from here,
a secure divi of just over 2%,
and very well backed by CASH + assets,
run by a conservative mgt team with a great track record,
in a market segment that seems to have growth potential.
Note the recent placing from RQIH and their comments
that BREXIT actually created more opportunities for them
no doubt ST in ic will cover the share buy back which will make more investors aware of BPM
"Insurance sector investor LSE:BPM:BP Marsh trades at a big discount to net asset value (NAV). We said so last year and believed it was "unfair". That discount has narrowed since, and investors have made big profits, but there's a clear argument ..."
"B.P. Marsh has released a trading update for the 6 months to 31 July 2016. It provides details of a new investment (ARB), disposals (Broucour, Randall & Quilter and final stake in Hyperion) and an increased shareholding (LEBC). It has a strong pipeline of investment opportunities together with £6.6m net cash available. Shareholders will welcome the 3.76p/share (+10%) dividend announced for the FY ending 31 Jan 2017 and the comment that it is the intention to at least maintain that level of dividend in FY 2018/19. The interim results will be announced on 18 October..."
for me no news is good news on the besso disposal.
so i think within weeks we are looking at NAV of 260p,
of which > 100p in CASH, with a great mgt track record.
applying a 20% discount to equities gives fair value of c.230p,
taking 20% of even the CASH (which seems extreme given then invest CASH successfully) gives a value value of 210p,
applying 25% to the equities and 10% to the CASH gives 210p.
So that seems like reasonable value target in 2016 for me.
There is always the possibility of upside from the corporate activity,
and next year should see NAV rise further to 270p.
there seems minimal downside given CASH and NAV
"B.P. Marsh has delivered another excellent set of results with an increase in NAV to 243p/share (31 Jan 2015: 216p), a good pipeline of new investment opportunities and a healthy supply of cash. Total Shareholder Return in 2016 was 13.7% (2015: 8.2%) whilst average NAV annual compound growth since 1990 has been an impressive 11.4% and, as expected, a final dividend of 3.42p/share (+24.4%) has been declared. In addition there are a number of actions in place to narrow the gap between the share price and the NAV including..."
Per previous posts I was expecting NAV to be >235p,
243p is a fantastic result - underlying equity valuations growing at > 20%,
and after July share price will be supported by c.70p of CASH.
So adjusting for CASH the investment portfolio is at a discount of almost 50%!!!
Simon Thompson will defo pick up on this and I think set a price target of closer to 200p.
For me an overall discount of 25% is a minimum so today that gives fair value of 182p,
but would expect another 10% NAV growth over the next 12 months so 200p likely,
which represents >25% growth including divi (share price backed with 40% CASH!)
I wonder any chance of a CASH return when they get loan repaid in July?
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