News Column

Daily Mail, London, market report column

August 14, 2014

By Geoff Foster, Daily Mail, London



Aug. 14--FORMER number one rated banking analyst Martin Hughes founded London-based Toscafund in 2000 and he has since been given the City nickname of 'The Rottweiler' because of his aggressive investment style.

If his hedge fund takes a strategic stake in a quoted company, it might take time but something corporate and sexy eventually happens. For a start, underperforming management are shown the door and Hughes usually replaces them with teams to immediately enhance shareholder value.

It certainly did for Daisy Group yesterday when shares of the reseller of telecoms and other services to small and medium-sized businesses buzzed 17p higher to 192p after confirming it had received a cash bid approach at that price from a consortium headed by Toscafund, which holds 28.5pc, and Penta Capital, as well as Daisy's own chief executive Matthew Riley, who sits on 23pc of the equity.

Under the City Takeover Code, Toscafund, Penta and Riley are now required to either go public with a 'firm intention to make an offer for Daisy' or confirm they will not seek a deal, by September 10. The consortium, which already owns 51.5pc, said it was at the 'preliminary stage of considering a possible cash offer' for the entire share capital.

The three individual investors are not yet considered joint bidders for the purposes of the Takeover Code but are in discussions with the Takeover Panel and Daisy in respect of the offer. The ubiquitous Daisy has a market capitalisation of pounds sterling 507m and has bought more than 20 companies or parts of companies since flotation in 2009.

Developments at Daisy had shrewd punters sniffing around other 'interesting' stocks which have Toscafund at the top of the share register. Sinclair IS Pharma held rock steady at 29.25p but touched a high of 34.18p in June after investor George Soros forked out pounds sterling 9m on taking his shareholding above 5pc, 11pc shy of Toscafund's stake.

Rumours were rife at the time that private equity players Blackrock and Warburg Pincus were looking to buy the company in order to get their hands on Silhouette, a subsidiary that has found a replacement for Botox. Silhouette Soft is a pounds sterling 1,200 anti-ageing treatment that uses dissolvable stitches to beat wrinkles.

Hughes's Toscafund is also a 16pc shareholder in Speedy Hire, the vulnerable Merseyside-based provider of tools and equipment. The shares closed flat at 54.75p but it is forever rumoured to be a bid target more so now after this week's announcement that finance director Lynn King is to step down from the board to pursue other career opportunities. Findel, which owns Kitbag, the online UK sports retailer and seller of 350,000 replica football kits in more than 140 companies, eased 1.62p to 242p but is also worth watching. Why? You guessed it, Toscafund is its biggest shareholder with 25.8pc.

Dealers stopped fretting about an early rise in UK interest rates following the latest Bank of England Inflation Report and the Footsie rallied 24.26 points to 6,656.68. Wall Street jumped 91.26 points to 16,561.80 amid signs of an easing of tensions in Ukraine and Iraq. A notable casualty though was King Digital Entertainment, maker of video game 'Candy Crush Saga', which plummeted 23pc to $13.99 on weaker-than-expected revenues.

Hopes that UK interest/mortgage rates will not rise until early next year helped housebuilders Barratt Developments rally 9.6p to 350.8p and Redrow, in which Toscafund owns 9.85pc, put on 5.9p to 247.1p.

Chester-based Flowgroup, whose chairman is Clare Spottiswoode, the former director general of Ofgas, advanced 2.5p or 7pc to 37p after signing heads of agreement with social housing giant Mears, 3.5p up at 481.5p, to install and maintain their Flow microCHP boiler. Mears repairs and maintains 700,000 social homes across the UK. Many will now be fitted with a boiler that can generate electricity as it heats the home. Mears interims next Tuesday and they will not disappoint.

Geoscience services business Getech jumped 6.5p to 52.5p after an upbeat pre-close trading statement. The year ended strongly with contract wins totalling pounds sterling 3m.

Dog of the day was President Energy which crashed 8.88p or 28pc to 23.25p on news that the Jacaranda well in Paraguay was found to be dry. North Sea oil explorer EnQuest eased 5.9p to 118.8p following half-year results. EnQuest maintained its year-end average production target of 25,000-30,000 barrels of oil equivalent per day.

SVG Capital edged up 1.5p to 426p despite news that boss Lynn Fordham had sold 35,000 shares at 426.65p a pop.

Profit-taking following results that failed to meet recent bullish expectations dragged Plus500 28.25p lower to 491.75p.

(ASTERISK)(ASTERISK)(ASTERISK)

BUYERS chased Amara Mining 0.88p higher to 23p after exceptional drilling results from its Yaoure project in Cote d'Ivoire. Once in production, it will be one of Africa's top ten biggest gold mines. Work has now begun on the first resource update which is due in September, the next major milestone for the group. Peel Hunt says 'it's a stock to own, and investors should get the shares while they are still cheap'.

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(c)2014 Daily Mail (London, )

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Source: Daily Mail (London, England)


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