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Tuesday newspaper share tips: SVG Capital, Royal Dutch Shell

Tue, 04th Oct 2016 15:15

(ShareCast News) - Harbourvest's offer for SVG Capital undervalues the company by such a wide margin that new bidders are likely to appear, The Times's Tempus said.Hence, investors should await further developments before acting, the tipster mused.SVG offered 650p a share in cash, well below the 750p assigned to the private equity outfit by one valuation.Indeed, the company itself revealed on the previous day that a consortium of bidders, which included Goldman Sachs and the Canada Pension Plan Investment Board, was among the potential suitors, with at least one other potential bidder waiting in the wings.Harbourvest had a track record of picking companies up on the cheap but, "the discount represented by HarbourVest's cash offer therefore looks far too large," Tempus concluded."The offer from HarbourVest looks low ball and this could flush out another, better offer from elsewhere," so 'hold' Tempus concluded.Investors would be wise not to overlook a soundly financed outfit offering a 7% dividend yield, The Daily Telegraph's Questor said with Royal Dutch Shell in mind, especially with interest rates and yields at 'rock bottom' levels.True, the oil giant's profits don't cover this year's dividend and barely so in the case of the following year's.Making matters worse, there is a risk that Opec's agreement to cut its output to prop-up oil prices won't hold, if history is any guide, and it still has to make its "huge" acquisition of BG work.Hence the high dividend yield on offer, although the higher the price of crude oil rises then the safer that dividend looks, according to Questor.'Hold', the investment column recommended to its readers.

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