26 May 2021 10:01
London, UK, 26 May 2021
Edison issues update on Electra Private Equity (ELTA)
On 21 May, Electra Private Equity (ELTA) announced the board's intention to demerge Fridays - the largest of the two operating businesses (74% of ELTA's NAV) - onto the FTSE Main Market and, subsequently, to bring Hotter Shoes (10% of NAV) to AIM through reclassification of the Electra entity. This followed the 15 April announcement about the disposal of Sentinel for £22.2m (58.1p per share), £11.3m higher than the asset's carrying value on the balance sheet at 30 September 2020. ELTA has been following a realisation strategy since October 2016, when it had a market cap of c £1.7bn, and has since returned c £2bn to shareholders. Since our December 2020 initiation note, the shares have appreciated from a 22% discount to NAV to currently trading at a 7% premium. The share price has almost doubled from 275.5p to 550.5p per share.
· ELTA's performance over one year and shorter periods has responded very positively to the strategic and operational efforts within the group of the past 24 months, including the ongoing progress of the realisation of assets, with Sentinel sold in April 2021 (proceeds of £22.2m).
· ELTA's management has, over the last six months, realised a lot of the upside we highlighted in the scenario analysis in our initiation note, and the increased NAV of £196.9m on 31 March 2021 reflects its efforts.
· ELTA's strategy remains the realisation of assets in the best possible way for shareholders.
· ELTA's management believes that the TGI Fridays business, with 87 sites now fully open in accordance with government guidance, is well positioned to emerge from lockdown strongly, with a robust pipeline of additional sites due to open in 2021 and beyond.
· Hotter's EBITDA in the seven months to end April 2021 is 8% ahead of pro forma EBITDA for the continuing business in the year to January 2020, which indicated pro forma full-year EBITDA of £5.4m, up £0.9m on Q120.
· A further update will be provided by the company as plans progress.
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