HULT Private Capital Optimistic 2022 Projection Offers Strong Opportunity For Investors - PowerPoint PPT Presentation

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HULT Private Capital Optimistic 2022 Projection Offers Strong Opportunity For Investors

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The most recent large takeover bid is one for $9.5 billion by Fortress Investment Group to purchase the British grocery chain Morrisons. The Fortress offer is just the most recent private equity acquisition attempt, which, Lazard Asset Management states, accounts for 85% of taking-private British deals over the last year. 2022 is looking likely to deliver more of the same! – PowerPoint PPT presentation

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Title: HULT Private Capital Optimistic 2022 Projection Offers Strong Opportunity For Investors


1
HULT Private Capital explore the upsurge in
Private Equity 2022
2
  • Several recent headlines are talking about how
    Britain is the centre of a global Private Equity
    buying spree. This activity is either a worry for
    some or an opportunity for others. The years
    record-setting buying spree is causing
    politicians, trade unions, and uneducated
    investors to worry about potential job losses and
    increased debt levels. However, the savvy
    investor can realise the opportunity for what it
    is and knows the great potential.

3
What Is Going On?
  • Since the start of the year, a flurry of bids for
    companies post Brexit and the Covid-19 pandemic
    left London-listed companies trading with cheap
    valuations and, thus, vulnerable to takeovers.
    These takeovers are being orchestrated by Private
    Equity buyout firms such as HULT Private Capital,
    which use debt to quickly acquire businesses that
    they will typically own for between three and
    five years, maximising the value contained within
    the organisation before selling them for a
    profit.
  • The most recent large takeover bid is one for
    9.5 billion by Fortress Investment Group to
    purchase the British grocery chain Morrisons. The
    Fortress offer is just the most recent private
    equity acquisition attempt, which, Lazard Asset
    Management states, accounts for 85 of
    taking-private British deals this year. A stock
    market with undervalued companies has resulted in
    Private Equitys willingness to spend 45 billion
    to purchase British companies in the first half
    of 2021. Refinitiv data illustrates this
    increase, more than double the next best first
    half-year on record and accounting for almost 10
    of the total 547 billion which PE has spent
    globally.
  • In most cases, the Private Equity buyout model is
    a positive for the target companies usually in
    need of a managerial and strategic shakeup or
    injection of financing. Critics tend to point to
    some prominent downfalls like the Debenhams
    department store group, which was laboured under
    a significant debt burden when their private
    equity owners had moved on. Looking at Debenhams
    on an economic level, Debenhams group had
    extensive financial issues before their PE
    takeover, and benefiting from the cash injections
    it saw likely kept it afloat longer than it would
    have without the takeover. The Debenhams PE
    shareholders and investors also made millions of
    pounds from the risk they took.

4
  • July data from Peel Hunt showed 38 London-listed
    companies were either already acquired by Private
    Equity or were in the process of being acquired
    this year. Besides the Morrisons deal, included
    in the list are Dubilier Rice and KKRs
    acquisition of John Laing Group, an
    infrastructure firm, as well as Advent-owned
    defense firm, Cobham, agreeing to a 3.6 billion
    takeover of Ultra Electronics just this past
    week, on top of CVC and the London-listed Stock
    Spirits announcement of an approximately 1
    billion deal the week prior.
  • JPMorgan Private Banks head of investment
    strategy for EMEA, Grace Peters, called private
    equity interest in UK companies an excellent
    thing, saying that with equity investment, you
    want to know there is an incremental buyer.
  • The British attraction for cash-rich Private
    Equity is obvious. Since 2018 the US and European
    stock indexes have gained 65 and 25,
    respectively, while the FTSE 100 is down 8 over
    the same period, trading at only 12.6 times
    future earnings. The US and Euro benchmarks
    currently sit at 21 times and 16.3 times future
    earnings, respectively British stocks are
    discounted to their global peers at the deepest
    levels in over three decades.

5
  • The reasons for this discount are many Brexit is
    first on the list, with COVID right behind it. A
    quote from HULT Private Capitals Senior
    Management Team member, Amrit Singh typical
    FTSE-100 banking, energy, and mining shares, have
    cheaper valuations than the tech sector, as their
    performance relies on a positive growth outlook
    however, smaller British stocks are only trading
    at 13.2 times future earnings, behind US midcaps
    with an average 17.6 times. This difference
    provides HULT with a plethora of acquisition
    opportunities, of good British companies for our
    Private Equity group.
  • Janus Henderson, a portfolio manager at Tom
    OHara, goes even further, saying that UK
    valuations are often unjustifiably cheap, even
    when these companies are hugely cash-generative,
    adding that UK for sale is an ongoing theme and
    will remain so until the market is better value.
    While the market refuses appropriate market
    valuations, Private Equity is happy to come and
    take these great companies on the cheap.

6
  • Benefiting the market as a whole
  • This generous price premium also benefits the
    average investor by raising asset managers
    higher share prices expectations for the London
    stock market after its years of underperformance.
    According to Peel Hunt analysis, Morrisons
    shareholders will reap a 40-plus premium
    assuming the buyout proceeds at 270 pence/share,
    in line with this years average premium offered
    by private equity firms.
  • Medias PE bark is bigger than the bite
  • Supply and demand laws dictate that Private
    Equity deals will continue to support share
    prices by removing equity from the market
    however, though the headlines might be sound
    extravagant, it should be noted that the 2.4
    trillion-pound FTSE 350 index dwarfs PEs 11
    billion pounds in market cap withdrawals through
    July. Even if all the announced deals go through,
    Peel Hunt estimates that only 26 billion pounds,
    totalling 13 billion shares, with leave the
    public space but to the advantage of their
    shareholders, who will likely reinvest in other
    undervalued British companies, and according to
    Charles Hall, Peel Hunts head of research,
    supply firepower for fundraising for IPOs.

7
  • PE at HULT Private Capital
  • This market of opportunity is excellent for HULT
    Private Capital to find good deals among
    undervalued firms on the London Exchange. There
    are now several arbitrage opportunities between
    public and private markets that our investors can
    gain from while taking advantage of low lending
    rates to purchase identified potential takeover
    targets. With low price-to-earnings ratios
    staying attractive, we see nearly unlimited
    upside for buyouts of British companies. We will
    continue to offer opportunities for investment in
    our HULT Private Equity takeovers to accredited
    investors and High Net Worth Individuals who wish
    to see superior returns not possible with
    traditional capital markets.
  • Summary
  • Private Equity will continue to be a hot topic
    while the opportunity to profit remains. Though
    there has been lots of movement in this area, and
    the takeovers make big headlines, PE makes up
    only a small portion of the market. For savvy
    investors, well-executed PE takeovers will
    continue to be an opportunity to benefit from
    their superior returns.

8
Contact Us
  • Company Name HULT Private Capital Contact
    Person Press TeamEmail press_at_hultprivatecapital
    .com
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