Top UK Stocks to Watch: Sanne opens door to Cinven takeover on fifth knock

Sanne shares pop on a possible takeover, Naked Wines warns growth will slow after experiencing a boom in demand last year, landlord Grainger buys The Forge in Newcastle, Man Group shuffles its board, and the ‘world’s first listed Space Tech fund’ chooses London for its IPO.

UK

Top News: Sanne shares surge higher as it starts takeover talks

Specialist alternative asset fund Sanne Group said it has agreed to enter discussions with Cinven about a potential takeover of the business after the company tabled its fifth offer.

Private equity group Cinven has been pursuing Sanne Group for months but has struggled to convince the board with its offers. However, Cinven’s latest offer of 875 pence per shares seems to have been enough to open talks with Sanne about a possible all-cash offer at around that price.

Cinven will now have until July 9 to decide whether to make a firm offer for Sanne or not.

‘There can be no certainty that any offer will be made, nor as to the terms of any such offer. A further announcement will be made if and when appropriate,’ Sanne said.

Sanne first revealed that Cinven had tabled not one but three unsolicited bids back in May, with the third bid tabled at 830 pence per share. Sanne descried that as ‘opportunistic’ and undervalued its long-term prospects before ultimately rejecting it. Cinven then came back with a fourth offer of 850p, which was also turned down.  

When it turned down previous offers, Sanne said it was confident in its prospects as a standalone business as one of the only global providers of alternative asset and corporate services with a unique technology platform.

Sanne has remained resilient during the disruption caused by the pandemic, reporting 7.3% revenue growth across all its regions last year, with organic growth of 5.8%.

Where next for the Sanne share price?

The Sanne Group share price trades at a new all-time high, it trades above its ascending trendline dating back to mid-February. It also trades above its 50 & 100 sma on the daily chart showing bullish trend as buyers' eye 900p 

The RSI has moved into over-bought territory so there could be some consolidation at this level before further gains. 

Immediate support can be seen at 850p the ascending trend line support. Beyond there support can be seen at 830p the previous all-time high from October 2017 and 800p round number and yearly high. It would take a fall below this level for a more bearish picture to dominate. 

Naked Wines warns growth will slow after surge in demand last year

Naked Wines said the strong momentum seen in its recently-ended financial year has continued but warned that growth will slow this year as it starts to come up against tougher comparative periods following a boom in demand during the pandemic.

Revenue jumped 68% in the year to late March to £340.2 million from just £202.9 million the year before. The company reported a contribution profit of £77.2 million compared to only £42.6 million the year before.

Its adjusted loss before interest and tax shrunk to £1.5 million from £2.4 million the year before. At the bottom-line, Naked Wines turned to a £10 million loss at the bottom-line, slightly smaller than expected by analysts, from an £8.2 million profit.

Naked Wines said it was increasing its focus on the US, where sales jumped 78% during the year. The company is expecting the country, which it says has a total addressable market of over $20 billion, to drive future growth going forward.

Naked Wines said it has continued to perform well in the new financial year, with total sales up 96% in the first two months of the year. Repeat customer sales have more than doubled while new customer sales grew by 30%.

The company is expecting to report annual sales of between £355 million to £375 million this year, forecasting a slower rate of growth as it starts to come up against tougher comparative periods following the surge in demand for wine subscriptions last year. Although winning new customers will become harder going forward, retaining the huge numbers of new customers over the past year will also be key to its success.

‘As we head into FY22, we are focussed on investing in the opportunity and executing against our strategic initiatives, which are to invest in new customers at attractive payback, to enhance the customer proposition to improve long-term value, to leverage our scale to enhance value creation, and to broaden and enhance our go-to-market strategy, driving growth,’ said chief executive Nick Devlin.

Naked Wines shares were trading 1% lower in early trade this morning at 783.5p.

Grainger buys The Forge in its hometown of Newcastle

Grainger, the largest residential landlord listed in London, has spent £57 million on buying a build-to-rent property named The Forge in its home city of Newcastle.

The Forge was completed in 2019 and has 283 rental apartments complimented by 3,500 square feet of common space including a gym, lounge and co-working space. It also has a commercial unit on the ground floor.

‘This is Grainger's first purpose built, build-to-rent investment in its home city of Newcastle, where the company was established in 1912 and remains headquartered. Newcastle meets with Grainger's investment criteria as a target city in its national build-to-rent and private-rented sector growth strategy,’ the company said.

It has been purchased from Moorfield Real Estate Fund III and the price represents a gross yield of 6.25%.

‘We are very pleased to have acquired a stabilised build-to-rent opportunity that meets Grainger's high standards and is located in our home city of Newcastle. The Forge is proven as a great place to live, and, provides us with immediate rental income, further boosting our ambitious growth plans,’ said chief executive Helen Gordon.

Grainger shares were trading 0.1% lower in early trade this morning at 290.0p.

Man Group shuffles board as chief investment officer resigns

Man Group said its chief investment officer Sandy Rattray has handed in his resignation and that it has reorganised its board.

The investment management firm said Rattray will hand over his responsibilities over ‘the next few months’ before leaving.

Meanwhile, chief financial officer Mark Jones will become deputy chief executive, taking responsibility for its tech and data-driven investment unit Man AHL, institutional investment manager Man Numeric, and the wider company’s technology functions.

Jones will be replaced by Antoine Forterre, the current chief executive of Man AHL. He will also become an executive director when he becomes chief financial officer after a transition period.

‘I would personally like to thank Sandy for his fantastic contribution to the firm in his role as CIO and previously as CEO of Man AHL. He has been at the heart of our pursuit of excellence in investing, and the cutting-edge technology that enables it, helping make Man Group what it is today. However, the silver lining is that I am very excited by the new appointments, the calibre of the team around me and the bench strength that we have as we continue our tech-driven growth journey,’ said chief executive Luke Ellis.

Man Group shares were trading broadly flat this morning at 180.7p, having hit their highest level since mid-2018 during yesterday’s trading session.

Seraphim Space Investment Trust plots London IPO

Seraphim Space Investment Trust has outlined plans to go public in London to help investors gain exposure to the space technology market.

The closed-end investment trust plans to list on the main market of the London Stock Exchange to make it ‘the world’s first listed Space Tech fund’. The company’s investment manager Seraphim Space was launched in 2016 and is now the largest space tech investor in the world.

‘Space Tech is forecast to be a multi-decade, trillion-dollar investment market that has not previously been available through listed opportunities. We are excited to offer investors access to a diversified portfolio of some of the sector's highest growth-potential companies,’ said Will Whitehorn, the chair designate of the trust.

Seraphim Space Investment plans to buy a portfolio of 15 seed assets from the fund that were valued at around £26.1 million at the end of May. However, it is hoping to also buy stakes in four larger companies – including quantum encryption company ArQit and satellite firm Spire Global from the fund but is waiting as they are currently undertaking corporate activity. If finalised, the trust believes the four additional assets could be worth an initial £70 million, giving it an initial portfolio worth £96 million.

The IPO will allow investors to buy shares for 100 pence each, providing the cash needed to buy the portfolio of assets. Importantly, Seraphim Space Investment plans to raise more cash than it initially needs at the same price so it can fund more deals.

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