Kelso Group Holdings PLC Angling Direct Plc new investment (9746U)
November 29 2023 - 2:00AM
UK Regulatory
TIDMKLSO
RNS Number : 9746U
Kelso Group Holdings PLC
29 November 2023
Kelso Group Holdings Plc ("Kelso" or the "Company")
Angling Direct Plc new investment
Mello conference
Kelso, the main market listed investment company, is pleased to
announce that it will be speaking on Thursday 30 November at the
Mello conference at the Clayton Hotel Chiswick, Chiswick High Road,
London, W4 5RY Chiswick, where the Company will be outlining its
views on current market conditions and its investment case.
In the year to date over 30 companies, with a market
capitalisation between GBP50 million and GBP1 billion have exited
the UK market via acquisition to trade or private equity, in many
cases yielding high exit premiums. This highlights the current low
valuations and the short-term opportunity for investors, but if the
lack of investor interest in UK listed companies is unabated, we
see this trend continuing. Kelso will benefit from this current
extreme under-valuation but, as a strong supporter of the UK listed
market, believes there will continue to be attractive investment
opportunities for the medium term, particularly at the smaller end
of the market.
New investment in Angling Direct Plc ("Angling")
Kelso is pleased to announce that it purchased 2.32 million
ordinary shares in Angling, at an average price of 35.1p,
representing 3.0% of the total issued share capital in the
company.
Angling is the largest specialist fishing retailer in the UK
with an estimated UK market share of 12%, according to the company,
being approximately 8x larger than any other UK competitor. From
IPO in 2017 to today, Angling has grown its stores from 15 to 46,
with revenue growth from GBP21 million 1 to GBP83 million 1
expected for the year ending January 2024, with EBITDA growth from
GBP0.8 million 1 to an expected GBP2.7 million 1 . Despite the fact
that revenue is expected to have grown 4x since IPO and EBITDA is
expected to grow c.2.4x to the current year end, Angling's current
share price of 40p is less than two thirds of the issue price of
64p. Its current market cap, of which c.60% (GBP17.6m) is in net
cash, is almost exactly the same market cap as on IPO, and lower
than the capital raised since IPO. Angling has also grown their
online revenue to c.40% of total revenue creating an effective omni
channel distribution model. Angling is currently trading on a 5.0x
EV/EBITDA to January 2024 (pre IFRS 16) and 4.2x for the following
year to January 2025 (pre IFRS 16).
At IPO Current
Number of stores 15 46
Share price (pence) 64 40
N umber of issued shares
(million) 42 .8 77.3
Market cap (GBPm) 27.4 31.0
Capital raised (GBPm) 7.5 33.0
Revenue (GBPm) 1 21.0 83.0
EBITDA (GBPm) 1 Pre-IFRS 0.8 2.7
Net (debt)/cash 2 Pre-IFRS (1.4) 17.6
EV Pre-IFRS 28.8 13.4
EV/EBITDA 1 Pre-IFRS 36.0x 5.0x
1 At IPO: year ended 31 January 2017, Current: year ending 31
January 2023
2 At IPO: as at 31 January 2017, Current: as at 31 July 2023
Since IPO, Angling has successfully grown its portfolio and
there continues to be significant opportunity for Angling to grow
its UK business towards 20% of the UK market. The European business
is early stage and approaching break-even; despite Europe being a
potential opportunity, the commitment to this part of the business,
particularly given its own shares trade on such a low multiple,
needs to be reviewed before further significant capital
investment.
Kelso also believes that Angling has surplus capital and that
some of the GBP17.6 million of net cash, being c.60% of the market
cap, should be used to buy back a portion of its equity whilst the
shares are at or close to the current level.
John Goold commented:
"Kelso is delighted to become a small shareholder in Angling
Direct whilst acknowledging that the top 4 holders control 66% of
the company. Given the potential growth of the business and current
low valuation, a sustained investor relations strategy along with a
buy back would, in our view, significantly enhance value for
shareholders."
For further information please contact:
Kelso Group Holdings plc +44 (0) 75 4033 3933
John Goold, Chief Executive Officer
Mark Kirkland, Chief Financial Officer
Jamie Brooke, Chief Investment Officer
Zeus (Broker) +44 (0) 20 3829 5000
Nick Cowles, Ed Beddows (Investment Banking)
Ben Robertson (Corporate Broking)
About Kelso
Kelso was established in 2022 to identify, engage and unlock
trapped value in the UK stock market. Kelso's strategy is to invest
in situations where there is an anomaly between the intrinsic value
and prospects of a company and its stock market valuation. Kelso
will, in particular, look for situations where it believes the sum
of the parts of a business is greater than the current value.
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END
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