Is this the possible strategy? 2 Oct 2015 01:26
From http://www.quobpark.com/blog/to-list-or-not-to-list-part-one back in August....
Our view in relation to Daniel Stewart
With regard to our investment in Daniel Stewart, we believe that expansion by acquisition to achieve critical mass and improved profitability may be necessary to facilitate market and geographic coverage. In our view, this expansion is key (and may already be underway) for the company to achieve our 10p per share target, but not our current short-term 4.5p target. Our short-term target is based purely on the current fair value for the progress that is already being organically achieved by the management team, the new fees expected to be generated from work we shall introduce in relation to private companies and potential IPOs, and the work that we believe is already being introduced by other major shareholders.
We would expect Daniel Stewart to carry out any acquisitions only where they are both necessary to deliver on their strategy, and earnings enhancing. If equity is to be used in any material acquisition, then we would expect that it would be valued at least at the recent 3.35p placing price, or ideally at our 4.5p short-term target or above.
Beyond expansion by acquisition we believe that Daniel Stewart should be building relationships with private companies prior to their IPO, and in some cases making appropriate pre-IPO investments. This is becoming a crucial trend to be able to deliver growth and profitability for today’s investment banks.
Quob Park Estate has already identified a number of its investments that would be willing to take Daniel Stewart stock as currency for an investment by them at 3.35p or at a 20% premium to where Daniel Stewart is currently trading (whichever is the greater). We believe this approach should enable Daniel Stewart to ensure its role as a key advisor in any potential IPO, where the most significant banking fees are always generated. We believe that any private company opportunities introduced by QPE shall provide rapid profit growth opportunity for Daniel Stewart, as QPE’s own investment criteria state that our investments must target over a 50% return within twelve months.