LON:UBG | Electra Private Capital - ELTA - General Discussion

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17th Oct '21 by Will S

60 comments 4047 reads

For those of you that are holders of Electra Private Equity (LON:ELTA) the prospectus for the Hostmore demerger is here:

https://www.hostmoregroup.com/...

I've skimmed it over a coffee this morning and the main thing I picked up is ELTA holders will receive 3 Hostmore shares for each ELTA one they own. What I can't find (maybe I'm looking in the wrong place) is the market cap (and projected share price) of the new group.

Is this something that is further in the process or does that get announced once the Electra shareholders approve the demerger?

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About the Author

Will S

Premium Member

60 comments

jmallin1972

4th Nov '21

Any thought what has caused the substantial reduction in the share price (ELTA & MORE) since the demerger. I had thought the demerger was a catalyst of unlocking additional value for shareholders but appears (in the very short term) the market disagrees. Short Term blip or cause for concern?

Rusty2

4th Nov '21

Have you read Paul Scott's comments on the SCVR yesterday?

MiserableJacktPotato

4th Nov '21

More sellers than buyers.

The demerger has been really badly managed. No data, no forecasts, no message from the company, no trading update, nothing. Added to that nominee account brokers haven't distributed the shares in a timely manner either and it's just been one big s***show of a demerger. The fact Numis have walked away with £11m (or to put another way, around 7%* of the current value of Hostmore) is a scandal.

*My maths - 126m shares @ £1.17 = mkt cap £147m. If I've got this sum wrong, please feel free to tell me :)

timarr

4th Nov '21

I had thought the demerger was a catalyst of unlocking additional value for shareholders but appears (in the very short term) the market disagrees. Short Term blip or cause for concern?

It's a short term blip caused by technical issues. It doesn't tell us anything about the longer term prospects - and it's likely to take a while to sort that out as some institutions will sell, and others will buy. Institutions have different agendas to PI's. Three to six months to sort out probably. It was a predictable hiatus, although you can never be sure how these things will go.

From previous experience the delays in distributing shares to nominee accounts could also have been anticipated - there's not much opportunity to stag on a demerger, so anyone who thought they'd get away with a quick profit was being very optimistic. However, the crapola with Numis is ridiculous, although I don't suppose that had much to do with the Hostmore (LON:MORE) management team.

Note that we'll see the same when Electra Private Equity (LON:ELTA) moves to AIM. Some institutions - Witan Investment Trust (LON:WTAN) for instance - have no mandate to invest in AIM stocks so will be forced sellers.

timarr

JESSE LIVERMORE

4th Nov '21

The demerger has been really badly managed. No data, no forecasts, no message from the company, no trading update, nothing.

Difficult to agree with the above IGPJ!

Since the summer Electra Private Equity (LON:ELTA) have done the following in the name of investor communication:

28 Jun: Hostmore Capital Markets Day

25 Sep: Unbound Capital Markets Day

16 Sep: Hostmore Trading Update

28 Sep: Company sponsored report issued by Edison

02 Nov: Unbound Trading Update

Not sure what more they should have done.

This was after all not an IPO, but rather a demerger - existing shareholders would/should have already been aware of what they owned.

Frontrunner72

4th Nov '21

I think we just need to be patient, ignore the current noise and let things work themselves out over the course of the next 12-18 months.

At the end of day, we still own two decent businesses with solid growth prospects, both of which look quite good value in my opinion.

And takeover prospects are now higher for Fridays/Hostmore, as a clean standalone entity.

FR.

Will S

4th Nov '21

The volumes have been relatively light so I guess those institutions that want to buy Hostmore (LON:MORE) will have to slowly build their positions?

MiserableJacktPotato

4th Nov '21

Ok, I can accept I am wrong and that it's me that has struggled.

Of course, the collapse in share price would suggest it wasn't just me and that many PIs found this information difficult to obtain. Luckily we have Paul Scott to help us, the average PI doesn't.

Tortoise investor

5th Nov '21

Yes that's my point... the funds weren't returned to shareholders at the time.

ambrosia

9th Nov '21

I can't find Hostmore on stockopedia, am I being thick, or has the page not been created yet?

Rusty2

9th Nov '21

There is a problem which they are working to fix.

FREng

19th Nov '21

How can we value Electra Private Equity (LON:ELTA) now? The Hotter shoe business must be worth something and there's no news so one has to assume that as the price slides down daily the value slides up. If the sp slide is caused by institutions selling before the move to AIM and the name change to Unbound, why are there no RNSs?

John101

29th Nov '21

Just noticed Investor Meet Company are hosting Electra Private Equity PLC - 2nd Interim Report and Unbound Strategy Update on the 3 Dec 2021 at 1000. If interested you can register at investormeetcompany.com. Here's hoping, as a holder, for some positive news.

Surrey Steve

2nd Dec '21

Useful RNS put out by Electra today ahead of tomorrow's Investor Meet Company presentation : https://ir.design-portfolio.co...

About time Stocko was fixed to pick up these announcements.

gmtrader

2nd Dec '21

A long Broker report is out from Edison. Google Edison, register, and you can read for free.

Caper4

3rd Dec '21

thanks. Looks a very positive report

Tortoise investor

4th Dec '21

I've gone through the recent Edison note and the Hotter Shoes/Unbound looks quite interesting. I think there is a clearer 'story' about growth and expansion than there is for Hostmore which in my opinion still feels a bit old-school and where the franchise fees of 4% of revenue to the US franchisor limit profitability.

FY22 revenue growth is estimated to be +17% and then +16% for FY23. The reduction in the store estate has reduced overall revenue but this has been more than offset by reductions in costs through the focus on direct to consumer online which has transformed its margins.

H122 shows EBIT now of £1.6m - H222 is expected to be breakeven at EBIT and then EBIT is expected to be £3m for FY23. (We also have to remind ourselves that the lockdown at the start of FY22 will have had an impact on revenue and profits so FY22 is depressed because of this). Also Edison point out that ‘Hotter is unlikely to pay corporation tax for a couple of years at it has a tax asset of accumulated losses carried forward of £8m.’

Given there is no tax, can we fairly assume EBIT is essentially the post-tax profit? I don't know what level of interest they are paying. (Apologies for my ignorance around EBIT and EBITDA measures). On a FY23 expected p/e basis then can we assume this is trading around 10x at 72p (market cap of £28m)? If so, that looks reasonable given the mid-teens overall revenue growth and cost reductions.

Plus, they are seeking a £15m insurance claim relating to COVID - expected to be resolved in late '22 or early '23 which could throw in a bonus. However, I don't know if there are high costs in relation to seeking this claim as presumably lawyers are involved...

Would be grateful for anyone's thoughts on how the market cap compares to post-tax profitability.

Dicky Mint

7th Feb '22

useful page on the Hostmore site

Demerger Value Split for Tax Purposes - Tax base cost

intuitive6191

7th Feb '22

It has be said (if not already) that the Edison research is paid for by the company. It isn't exactly independent.

I was a long term and satisfied holder of Electra and continue to hold a small amount of demerged shares. I dont see that the current situation has been very beneficial to shareholders and dont expect much upside to be honest.

Chrisfarrell21

11th Mar '22

If anyone is following this for Unbound Group, the CEO, Ian Watson, has now gone over 5% ownership of the equity. It can only be a good sign, whether for prospects this year, or just for the fact that he is firmly trying to enhance shareholder value.

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Electra Private Capital - ELTA - general discussion

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Will S

60 comments

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