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Poor stock market conditions tend to make it harder to IPO, increasing the attractions of the RTO route, and increasing the bargaining power of shells like TMOR.
And meanwhile, the valuations of RTO targets for shells tend to be depressed.
So ironically, the s.p.s of shells like TMOR can become depressed at the same time as they are in effect becoming more valuable: more capable of cutting a cracking RTO deal on great terms - i.e. a better shell valuation and lower target valuation, and great quality targets.
Which makes a shell like TMOR - with both great cash underpinning and great deal prospects - a great place to 'park funds' at the moment.
Many investors may wish to reduce their exposure to shares in companies with trading businesses, but holding cash for months doesn't give any real direct upside - certainly in the short term.
TMOR though has both underpinning, and great potential upside - it could easily multibag from this level on a good deal.
And you don't have to worry about funds being tied up here for a while if you won't be using them anyway.
Amendment:-
TMOR should of course say ARA ... TMOR is a very similar shell that floated a month earlier.
Shell company PNPL nearly doubled in the first half of April, despite not even announcing any news.
PNPL is currently 6p, market cap. £3.58M.
But unlike ARA, PNPL is trading at multiples of its cash, which even at the end of last June was below £1M. (£930K.)
It's interesting to compared ARA's value with that of another shell that floated recently, with a similar amount of cash to ARA: GSC (GS Chain).
GSC floated at 1p, but has risen to its current s.p. of 5.5p, despite not even announcing any news, giving it a market capitalisation of £22M.
Which is over £20M. more than ARA's current market cap.: £1.024M., at 9.75p.
13th May 2022 8:00 am RNS Admission to trading and first day of dealings
"GS Chain is pleased to announce that admission of its shares to trading on the London Stock Exchange's main market ("LSE") will take place and dealings will commence at 8.00 a.m. today, under the ticker GSC and ISIN number 984500K398M8C508B642.
The Company is direct listing 399,985,888 Ordinary Shares on the Official List. Market capitalisation at 1p is £3,999,858.88.
About GS Chain
GS Chain intends to identify opportunities within the technology sector, to conduct the necessary due diligence and subsequently complete an Acquisition. While the Directors will consider a broad range of technology sectors, those which the Directors believe will provide the greatest opportunity and which the Directors will initially focus on include the use of technologies in real estate, banking, finance, fintech, telecommunications, automotive and blockchain industries. The Directors may consider other sectors if they believe such sectors present a suitable opportunity for the Company.
The Company's objective is to generate attractive long term returns for Shareholders and to enhance value by supporting sustainable growth, Acquisitions and performance improvements within the acquired companies. The Directors will also use their knowledge and experience across a wide range of industry sectors in acquiring, investing and integrating businesses, which allows them to assess the viability of acquisition opportunities and their management teams, which is fundamental to finding the right Acquisition.
The Company's admission document is available to view on its website https://gschain.world/"
https://www.lse.co.uk/rns/GSC/admission-to-trading-and-first-day-of-dealings-dr1jidj76838vvl.html
The cash shell TMTA released its final results today, and here are a couple of key points from Chairman's statement:-
26th Jul 2022 7:00 am RNS Final Results
"Results for the period 25 March 2021 to 31 March 2022
... The recent resets of pricing in technology stocks in our view works to the company's advantage. ...
... we look forward to updating the market on our progress. ..."
https://www.lse.co.uk/rns/TMTA/final-results-587ma8gkxqc1q20.html
That first point supports the view that I set out here on 7th. June, i.e.:-
Poor stock market conditions tend to make it harder to IPO, increasing the attractions of the RTO route, and increasing the bargaining power of shells like ARA.
And meanwhile, the valuations of RTO targets for shells tend to be depressed.
So ironically, the s.p.s of shells like ARA can become depressed at the same time as they are in effect becoming more valuable: more capable of cutting a cracking RTO deal on great terms - i.e. a better shell valuation and lower target valuation, and great quality targets.
As regards deal progress, TMTA is keeping its cards close to its chest, as is to be expected re such negotiations.
But 'reading between the lines', positive progress seems to have been made, and the company may well issue some good news in the near future.
This bodes well for ARA also having made positive deal progress.
In their recent interim results statement, a couple of weeks ago, ARA noted that the current energy crisis was boosting renewable energy growth:-
7th Sep 2022 7:00 am RNS Half-year Results
"Interim Results for the period ended 30 June 2022
7 September 2022 - Aura Renewable Acquisitions plc, a UK-based company, whose objective is to invest in the global renewable energy sector supply chain and thereby build shareholder value, announces its maiden interim results for the period from the date of incorporation on 4 November 2021 to 30 June 2022. ...
"John Croft, the Chairman of Aura commented:
"During this initial financial period the Company joined the Standard Segment of the Main Market of the London Stock Exchange on 8th April 2022 and raised gross proceeds of £1,000,000 from a placing and subscription.
"Since listing, Aura has begun to explore a range of potential targets in the UK and overseas which could offer the opportunity for significant growth in this exciting and fast-moving market sector. We have also been in discussions with the Board's extensive professional and business networks to raise the Company's profile and highlight its intentions and objective to this large potential introducer base.
"The current worldwide economic and political uncertainty caused by supply chain issues, inflation, interest rate rises, hostilities in Europe and further afield, the lingering impact of Covid and climate change, have had a dampening impact on capital market activity and fund raisings during 2022.
"Despite these uncertainties, the growth in renewable capacity continues, with solar capacity leading the way. Installed renewable energy capacity around the world increased by 6% in 2021, despite post-Covid delays and rising raw material costs of 15%-25%. The International Energy Agency (IEA) expects 2022 to create further growth of 8% in installed capacity, not least as countries that have relied upon oil and gas from Russia are now accelerating the expansion in renewable energy capacity in response to the war in Ukraine.
"As a result of these market forces, we are more confident than ever that the renewable energy sector will offer excellent opportunities for acquisitive and organic growth for the foreseeable future, and we are committed to ensuring that the Company and its stakeholders have the chance to share in these opportunities." ..."
https://www.lse.co.uk/rns/ARA/half-year-results-sjcwoorehyzonr2.html
This further highlights ARA's attractions.