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Today's cash offer of 480p per share comes as a welcome surprise. BUT - it doesn't seem overly generous for a fast growing company such as IQG. It's a recommended offer so I doubt there is much chance of it going higher unless a rival bidder appears. Let's hope so!
There is an alternative which is to take unlisted shares in the bidding company. Maybe that is interesting? I'll need to look into the terms.
Anyway, good news even if the offer seems a bit low.
Have to say I really hate this. As a PI with no experience of the business world, it's great to have found a share which really seems to be going places in a sector that benefits the world in moving forward - and which is doing well for me. Coming nicely into profit, great product, net cash, what's not to like? After previous bitter experience it's important that no shareholder or group owns more than half so can do what they want and take a good business private for their own greed. Then what? It's STILL taken private, and cheaply given how it's growing. And what is this Bidco/Topco - I'm suspicious. Is it the usual rip off? Have I misunderstood? I wonder what's in it for the big shareholders? They can't be THAT blind to the prospects. So........ why???
Bidco/Topco are standard names used in these situations. Don't read anything into them.
I agree it's frustrating that a company that really seemed to be going places is being taken private in this way. Particularly as the bid price is not that much higher than where the shares had been trading recently. But all is not lost. You do have the option of retaining your shares in the company although as a (presumably) small minority shareholder in a private company you won't have much say in the way it is run.
My guess - and it is only a guess - is that the buyers (KKR) will invest a considerable amount into IQG over the next 5 years to try to make it a big global player in its market. Then, when the time is right, they will have an IPO (maybe in the US where valuations are higher) to cash in on their investment. Small shareholders such as you and I can ride on the back of this by opting to keep our shares rather than selling them at the 480p bid price.
BUT - we will be locking our money up for an indefinite period, there will probably be cash calls on us to help fund the development of IQG (which presumably we can decline although that will mean dilution of our holding) and it's quite possible the whole project will run into obstacles. So it's a big risk.
For me, I'm going to sell 70% of my shareholding in the market at a good profit (I was lucky enough to start buying in a few years ago at 70p) and take a punt on the privatisation/future IPO route I outlined above actually coming to pass. with my remaining 30%. This 30% could easily go to 0, but I think there is also a chance of it doubling or trebling 5 years down the track if things go well.
These are just my personal views. It's a high risk route. The safer option is to take the 480p offer and hopefully make a bit of a profit on that. As always DYOR.
Thank you for your time STLife. The clarification of the position is helpful. I'm up 55% now at 467, on my fairly small holding. Not to be sniffed at. Fortunate. I'll probably let it all go at 480. I can do without the complications and unknowns of private companies: a world I don't know at all. Just angry at what seems wrong to me.
Qd22, I agree that it is frustrating that the company is being taken private at such a small premium.
When the time comes it needs to be an all or nothing declaration - ie you sell all your shares at 480p or you hold on to all of them. You can't opt for 50/50 or anything like that. That is another frustration.
But as I like the company, have a long investment horizon and I am curious to see where the privatisation leads, I do want to hold on to a small number of shares. Therefore I am progressively selling the bulk of my holding in the market at around 465p-470p to leave a small residual number that I will take a punt on through the privatisation process.
One more thing - KKR has talked about investing significantly in the company so there will presumably be several rights issues / share subscription opportunities coming up. So there might well be a chance to increase your shareholding in the future although whether this will represent value or not will be very hard to judge. So just a small punt for me.
Also, I have no idea how all this will affect an ISA/LISA holding. So please DYOR on this.
ISA/LISA/SIPP from a standard online platform provider is unlikely to allow a private off market holding and not clear if any would allow part of your holding to be converted. You might want to look at buying KKR instead and at least you can trade it and keep an eye on it online.
Thanks YHAL. I thought that might be the case. I hold my shares in a trading account so it doesn't affect me.
As you probably know KKR is a huge PE/VC operation that is probably 1,000 (or more) times bigger than IQG so investing in KKR directly won't give you much visibility into IQG's own performance.
But they have many other holdings that will also perform. usually some of the cleverest people in the room.