18 September 2019

PE Firms acquire Sanderson and Synnovia

At a recent meeting with an institutional investor a fund manager explained to us that concerns about liquidity were making it very difficult to hold smaller AIM stocks in funds that offer daily liquidity to their investors.  He thought that investment in smaller public companies would have to be undertaken by private funds pursuing a PE model.

Evidencing the trend, retail and manufacturing software developer Sanderson Group PLC has received court and shareholder approval of a £90 million cash takeover of the company from private equity firm Aptean Ltd, which is controlled by TA Associates and Vista Equity Partners.

Also, earlier this month Synnovia PLC recommended a £48.8 million takeover offer from funds advised by Camelot Capital Partners.  Camelot is the investment manager of Barker Partnership LP, which already held a 30% stake in Synnovia.

Investing clients of LGB hold shares in both companies.

The offer for Sanderson represented a premium of only 10% above the company’s share price at the time, however the shares have spent much of the last five years trading in a range of 60-90p.

The offer for Synnovia represented a 43% premium to the share price before the announcement, but the shares traded as high as 140p in 2017.

When buying or holding stocks whose value has been impacted by retreating fund managers, remaining investors should consider a bid as one possible investment outcome.

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