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Clearly something happening. I’ve had two calls this week from network panels asking for experts in fire safety to do industry calls
I’m not saying it’s Marlowe related but shows PE still very interested in this space
Ah, ok, good point. Bank’s loan loss provisions are a fair proxy for this kind of thing and at the moment they are low but definitely worth keeping an eye on in Q2 reporting season in another month or so
The old auditors used to put a rather lazy disclosure in to say that there was a rather large balance of lots of small balances which they weren’t auditing. These debts were old but deemed to be trading
What was the point you were interested in re the debtors?
I think debtor provisions should still be manageable - the credit environment is still fairly benign although will surely be tougher in their H2 given the interest rate hikes.
From a share price point of view, I would imagine this is all going to be driven by the TIC disposal in the short term.
Hopefully!
And assume you’re right re auditors. I’m very curious to know what the new auditors will disclose under trade debtors. The last auditors allowed a disclosure that I always thought a bit odd
Hopefully no issues with bad debts from SMEs
Results being published this Thursday which is a day later than previously scheduled - increasing the chances of a sale of TIC at the same time? I see the numbers will be unaudited - this ties in with a new auditor (announced last July) so probably their work needing a few more days to complete.
0.4% / 400k shares of borrowed stock returned to Capital as per the RNS last night - confirms further short closure
I agree in parts this is worth more. My only thought for selling the whole group is that as you say getting 16x atm would be challenging for the TIC business (although what it deserves - citation and PTSG were at those levels)
I think selling as a whole gets us there and let PE have the GRC gain (management roll also)
If we get £12 a share it’s wins all round and the investors at the £10 placing have done well
Re timings, you could be right. These auctions can move quickly and TIC is a sector well known to PE so many will be comfortable with the sector and growth (Cinven own JLA and tried to go into fire safety and lost steam, this would bail that business out for example)
Just mulling timings over - Do you think the timetable for bids / an announcement is alongside the results next week? The Sky report made it sound like discussions had been ongoing for a good few weeks - Marlowe would probably want to tie things in with results announcement, especially now that a leak has occurred?
Seems to be only you and me fighting the corner here! True - I think there is definitely a scenario here where the whole group is in play.
I still think they will look to build GRC for 2-3 more years but I’m sure a price at the top end of that range would work for most shareholders.
Fully agree. The rise is only due to the short close. The rate rise is very worrying here. No more M&A now this is full focus on cash generation. As I’ve said I’d support a 10% equity raise at this price for sure
I think they should look to sell the group as a whole. I know as two parts it’s worth a lot more but let PE have that. Get us shareholders out of here at £10 - £12 and I’m more than happy
Price has settled at £635m market cap or c.£800m EV - so 8x the 24 run rate ebitda. Given tic bolt ons cost 7x,platforms e.g Hydro-X cost 10x, then would expect a deal for a £300m revenue division would go for at least 14x ebitda. So, the market is currently pricing in a low chance of a deal. Alternatively, if a deal gets away at 14x, then Marlowe would unlock 5x worth of tic’s £45m run rate ebitda I.e £225m, thereby raising the EV by c25% to £1bn.
I think a deal will be done - the CEO has a career history of M&A and will have a deep pipeline of GRC deals / look to reposition the business away from TIC.
On this basis, there is significant upside awaiting in the short term and a few days before results is a great time for a new / top up investment.
Does anyone have a different view (or want to challenge my bull case?)
I’d have though GLG and Blackrock would follow they will both be at a loss now on their shorts
Hopefully we can surprise in terms of cash generation and then the shares will fly
Hoping the article attracts a bid for the whole group
Jp Morgan’s short position (c. 1m shares) is now closed. I’m not 100% clear on the mechanics of closing out a short position but the overall volume on Friday was 1.3m, so my assumption is that their closure was a significant feature of the rise last Friday, as volume yesterday was fairly normal. c2m shares remain on loan
Yes, I agree it is a shame but this potential deal does unlock some value quickly. I have held the shares for years and will wait until 2026 / end date of the new strat targets. Once directors and senior management have been paid out, for me, will be the time to sell. Until that point, I think this should continue to roll well and like you mention re Ideagen, there will always be the possibility of a PE bid in the background….
Let’s hope they can get something away. Ultimately £650m isn’t a huge cheque in PE world. My only slight annoyance was a sold a handful at 590p. I was nervous around interest rates and didn’t want to waste the chance to de-risk but at the time I did it I was happy
It’s a shame to split the group as I do think there’s a great story in software and service delivery combined but x-sell is always harder than envisioned
Interesting news on Friday - a sale would provide the financing to pivot more quickly to the advisory and digital spaces via M&A, avoiding the need for a placing. I sense that this strat review is part of the wider strategy that will form the basis for the next medium term plan, through to when the executive LTIP matures in 2026. Expecting most of the existing targets to have been met when results announced before end of June.
Clearly, if a deal is done for TIC (note the £650m quoted figure includes debt and is based off a multiple that is slightly out of date given the current climate), then the remaining business will be much lower revenue, higher margin, higher growth and should also benefit from a higher multiple. A significant rerate from here would therefore be possible.
All the other points remain: no evidence that shorts have reduced yet (so potential upside if they start to close) and upcoming results should be good (TIC will be shown as a mature division, generating high ROIC - so ideal time to sell).
It doesn't say much
https://www.thetimes.co.uk/article/making-650m-sale-could-tick-all-the-right-boxes-for-marlowe-l02bnzf5j
Can anyone see the Times article just out?
I'm only here as my partner is partaking in the companies SAYE scheme, and the first offering matures in August or September, so I'm sure there will be a number of very happy people with these events, although there may be higher number of sales during that period .
Things starting to happen …….
Agreed golden, certainly seems to have a greater value if split into two, hopefully the next few months will prove that. I imagine todays rise may get the attention of a few people, sometimes that then becomes self fulfilling with a SP rise as retail investors take a punt and even the ‘herd’ has a look……hopeful stuff. I would happily be a medium term holder for the software business…
My first few buys were around that level. I’d previously been selling up near £8 and was trying my luck again
My thought here was always that this was worth more in the PE world. I therefore averaged down (but didn’t grab the bottom and I’ve lightened the load on the way back up)
Ultimately this is what the fire business should be worth. The software side then (hopefully) is valued like Ideagen which got taken private for £1bln on a £30m EBITDA
I did think someone would like the group as a whole tbh
£650m is just above the current market cap.
Great news if anything happens with a part sale around that price…I bought in here at 7.40 and would be delighted to have my financial ‘pain’ relieved !!!
Bring it on….please