Feb 10 (Reuters) - SCS Group PLC SCSS.L :
* BOOKRUNNER- PROPOSED PLACING OF 9,853,024 SHARES IN SCS
GROUP
BY PARLOUR PRODUCTS HOLDINGS
* BOOKRUNNER- SELLER INTENDS TO SELL ITS ENTIRE HOLDING OF
9,853,024 ORDINARY SHARES IN SCS, REPRESENTING C.25.92% OF
COMPANY'S CURRENT SHARE CAPITAL
* BOOKRUNNER- PLACING SHARES IN SCS ARE BEING OFFERED BY WAY
OF AN
ACCELERATED BOOKBUILD
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Can readers shed any light on this please?
Don’t know the full background, but looks like the original private equity firm that backed SCS and floated the company is looking to exit its c.25% holding completely. Given the large size, it’s impractical to sell such a large amount on the open market so they have asked a broker to place the issue with institutions via a series of negotiated private sales. Usually done at a meaningful discount, excludes private investors (unless they’re friends and family of the broker) and is open to abuse if a prospective institutional buyer sells their existing shares before the deal is announced and the buys them back via the placement pocketing the difference. (One of Paul Scott’s bug-bears). Announced just now that all shares placed at a price of 220p, so slightly below yesterday’s 228p closing price.
Short term it typically drags the share price down but longer term clears the market overhang of a substantial holding in the hands of a keen seller. Question whether the sale by a private equity investor indicates they have an inside track on potential bad news (I’d be more nervous if it was the management making such a big sale) or is simply them cashing out their position after a strong recent run in the share price. Most PE firms are keen to recycle capital and cash out winners to put the money into something else so not an immediate red flag IMO. In some circumstances also puts a company “in play” if the shares are taken up by a single buyer looking to build a big holding prior to making a bid, so interested to see if there are any major shareholding announcements over the next few days.
Still the same company it was yesterday, so if you like the shares and aren’t spooked by the exit of a big shareholder, it could be a decent buying opportunity.
Gus.
