LDG6 Sep 2024 13:52
Wind-down request could narrow this stock's discount
The cash-rich investment company trades on a 38 per cent discount to NAV and has received a request for an orderly wind-down to return cash to shareholders
- Shareholder calls for wind-down of company
- NAV of £99mn (18.9p)
- 38 per cent discount to NAV
Logistics Development Group (LDG:11.75p) has received a requisition notice to convene a meeting to vote on an orderly wind-down of the Aim-traded investment company.
Huntress (CI) Nominees, a Jersey-registered investment vehicle which holds 6.86 per cent of the shares, wants the investment manager, DBay, to cease making new investments and prioritise the timely return of capital to shareholders. In results for the six-month period to 31 May 2024, the debt-free company held cash of £32mn (6.1p) and an investment portfolio worth £66.7mn (12.7p).
Since the accounting date, LDG has invested £2.4mn to raise its stake from 11.9 to 13.2 per cent in Alliance Pharma (APH: 35.4p), a distributor of consumer healthcare and pharmaceutical products. The holding is worth £25.2mn (4.8p). In addition, LDG has realised £1.65mn and banked a £0.6mn profit from the sale of its stake in Mission Group (TMG :24p), a UK advertising and marketing specialist. It means that LDG’s current cash pile, which is placed on deposit with Investec at an interest rate of 3.75 per cent, is around £31.5mn (6p), or half its market capitalisation of £61.6mn.
Other notable listed investments include a 9.1 per cent stake in SQLI (FR:SQI), a leading pan-European digital transformation business, which has a current value of €17.1mn (£14.4mn, or 2.7p).
LDG also holds two non-listed investments: a 27.5 per cent stake worth £17.8mn (3.4p) in Finsbury Foods, a bakery manufacturer that was acquired last year for £143mn by funds managed by DBay; and a £10mn (1.9p) high interest payment in kind (PIK) fixed-rate unsecured loan note issued to The Power of Talent Midco, a special purpose vehicle that owns the operating companies of unlisted Nash Squared Group, a recruitment and consultancy group.
Deep share price discount to book value
As has been the case since I included LDG in my 2023 Bargain Shares Portfolio, the shares are in deep value territory as highlighted by NAV being 60 per cent higher than the company’s market capitalisation.
This has not gone completely unnoticed as Richard Griffiths, the founder of investment bank Evolution and boutique finance house ORA Capital, has been stake-building. Known in the City of London as the 'Welsh Wizard' due to his stockpicking ability, the Jersey-based investor raised his holding in LDG from 10.9 to 15.3 per cent at the end of May (‘Welsh wizard' sees value in this stock – and so do we’, 28 May 2024).
The board is cognisant of the fact that LDG’s share price fails to reflect the value of the company’s assets, so requested and were granted authority to repurchase up to 15 per cent of the
Sign In
Follow the stocks
