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10/08/07	Azurite Investments (Hitchens Retail)	Retail investments	UK
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date	name	activity	location	news
Mid/End-July	Mathon Capital	Commerical property lender	UK
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2007-08-01 13:20 (v1.0.3)

After due consideration I have decided to pass on Saga. This should be an excellent signal for the rest of you to fill your boots!

Fi
1. Classification


Saga looks set be classed as a specialised consumer services company, putting it alongside companies such as EasyJet, Sainsbury and Greggs rather than an insurance company.


However, that is despite Saga generating 77pc of its profits from motor and home insurance.


The management says that reflects the fact that just 36pc of revenue is generated from insurance and that much of that comes from broking rather than underwriting.


The interesting point here is that consumer services shares as are often rated at about 20 times earnings, whereas UK-focused insurers trade on about at about 10 times earnings.


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2. Profits

During the past two years group profits before tax have been largely flat, rising only £1m in the last three years.

However, the shares look as though they will be priced at the top of the range, at around 245p.

That would give them a price earnings ratio of about 20 times, which is usually applied to a company where revenue and profits are growing very quickly.


3. Saga will have quite a lot of debt

A higher level of debt in a company increases risks to shareholders if anything goes wrong, as the owners of that debt have the first claim on any assets.

Saga will have debt’s of about £700m following the flotation against a balance sheet with net assets of £1.1bn.



4. Saga will still be majority owned by private equity

The largest single shareholder will still be Acromas, which is owned by private equity groups Charterhouse, Permira and CVC.

They are restricted from selling shares for 180 days. However, private equity is not known for publicly listed equities for the long term..

Management have assured that nothing will be done to damage the brand.

However, Saga will be an interested test case of the tensions between the interests of private equity owners who need to return cash to their investors and Saga customers who become shareholders themselves.


5. Expansion plans

Saga says it will boost growth and profits by offering legal services, share dealing, wealth management and private care in the home to its database of some 8.4m households.

However, can a leopard change its spots?

The group has not meaningfully shifted its profits from insurance during the past five years.

Each of those potential markets is also highly competitive.
ve reasons not to buy. (Daily Telegraph)

WIZZ AIR - "The Global Offer will comprise an offer of new Ordinary Shares by the Company to raise gross proceeds of approximately €200 million, and the sale of Ordinary Shares by existing investors, including investment funds managed by the Group's existing principal investor, Indigo Partners LLC ("Indigo"). It is also expected that, subject to Admission and other conditions being met, the Company will be considered eligible for inclusion in the FTSE UK Index Series. The Global Offer is expected to complete in June 2014."

Saga cuts float price despite 'exceptional demand'
Over-50s group Saga reduces maximum price at which it will sell its shares from 245p to 205p
by Richard Evans May 21, 2014

Source: http://www.telegraph.co.uk/finance/personalfinance/investing/shares/10846542/Saga-cuts-float-share-price-despite-exceptional-demand.html

Saga, the over-50s group, has cut the price range for its shares in the forthcoming flotation to between 185p and 205p.

Previously it had indicated a range of 185p-245p, so the change marks a 16pc reduction in the maximum price. The cut comes despite what the company called "exceptional demand" from private investors, many of whom are Saga customers.

Institutional investors have been less enthusiatic, however, indicating that they would not be interested in the shares if priced at the top of the original range. Sources close to Saga said the flotation had received demand for £1.5bn worth of shares from institutional investors across the new price range.

The company said the price cut was intended to increase the chances that investors who take part in the float would see gains when trading starts on Friday. "We remain very focused on seeking to underpin a positive aftermarket performance in the stock," the chairman, Andrew Goodsell, said.

Mr Goodsell said: “The retail offer has now closed, showing exceptional demand, and we continue to see strong momentum in the institutional offer.

"Given our desire to allow customers to play a significant part in the future ownership of the business, we remain very focused on seeking to underpin a positive aftermarket performance in the stock, with the appropriate balance between high quality institutional investors and retail investors.

"We are therefore narrowing the range to 185-205p per share to support a strong debut.”

The latest prediction of the price at which investors can sell their shares when trading starts is 223p, according to IG, which runs a "grey market" for its customers. If Saga sells the shares at the maximum 205p price, this would give investors an instant profit of about 9pc.

I decided against SAGA in the end - which should guarantee that they rocket!


FatFace abandons plans for IPO

TSB next one on my radar. A "clean" bank but unlikely to make much in the way of profits for some time.

Will keep reading the analysis what do others think?

I'm not now going to participate in the TSB IPO.

Interestingly, SAGA, which kicked off at 185p, is now down to 170p as I type.

Me neither - I didn't apply for SAGA but I did for PETS and BBOX recently.

My main reasons are:

Lots more shares to be issued - ie. the remaining 3/4 of the company - and this has to be before 2015 end.
TSB is likely to generate less than 10% returns. These are on the 'low side'.
Low returns have to mean mean low share prices.
TSB mortgages are a tadge risky - 45% being 'interest only' - even riskier when interest rates rise.
TSB is not involved in highly profitable investment banking.
The health of TSB is highly linked to the UK housing market - house prices are too expensive and customers are already overstretched.
No dividends - well, not until at least 2017.

From The Mail
13 June 14

Will you say yes to discounted TSB shares? Lloyds poised to sell first round of shares in eagerly anticipated float
By JAMES SALMON

Lloyds is poised to sell a tranche of spin-off lender TSB in one of the year’s most eagerly awaited stock market floats.

The public now has the chance to snap up shares in the challenger bank, formed out of 631 branches Lloyds was forced to sell as a condition of a £20billion taxpayer bailout.


Paul Pester, TSB chief executive, has pledged to run a simple bank for local communities – setting it apart from the scandal-hit High Street giants.

Lloyds is also selling the shares at a significant discount to the notional value of TSB – known as the ‘book value’ – at between 220p to 290p, depending on demand. The final price will be announced on June 20 and full trading will begin on June 25.

Even if the shares are sold at the middle of the range – 255p – TSB would be valued at £1.275billion.

This represents a discount of 15 per cent to its book value of £1.5billion.

Put more simply, the shares are being offered on the cheap – even compared with other bank stocks.

For this reason alone, some experts believe it might be worth a punt. Ed Croft, boss of investment website Stockopedia, said: ‘Lloyds is essentially a forced seller of TSB and as a result the float seems to be priced to go.

Our analysis suggests that even if priced at the higher end of the range, TSB could still be on a 20 per cent discount versus its banking sector peer group.’

But TSB is not suitable for investors seeking an income, unless they are prepared to stick it out for the longer term.

Lloyds has made clear that the ‘low level of profitability’ anticipated in the early years means investors will have to wait until spring 2018 to receive a dividend for TSB’s 2017 performance.

One big plus point is that there is no risk of skeletons coming out of the cupboard to hammer its share price. Lloyds has agreed to shoulder any past mis-selling claims – including for PPI – from TSB customers.

TSB also has a bigger capital buffer than competitors. This makes it financially secure and gives plenty of firepower to grow the business and boost lending.

On paper, TSB has plenty of opportunity to grow market share and achieve an ambition to increase the balance sheet by 40-50 per cent over the next five years.

At present it has 6 per cent of the UK’s bank branches, but just 4.2 per cent of current accounts. TSB reckons it can grow this to a 6 per cent market share, adding 1.5m customers to an existing 4.5m accounts.

On the mortgage lending front, TSB should enjoy a big fillip when starting to sell home loans via brokers early next year.

But Justin Modray from Candid Money describes the longer-term outlook as ‘mixed’ and says he is ‘ambivalent’ about the shares. ‘TSB’s mortgage book has a higher than usual exposure to interest-only mortgages, which could mean painful bad debts if the housing price bubble bursts,’ he says. ‘TSB will have to work hard to attract profitable customers.’ And he adds: ‘Overall, I am fairly ambivalent about buying the shares.
‘I doubt they will be a disaster and there is probably some reasonable potential longer term, but maybe the risks are too high for many mainstream investors.’

Investors will also have a reasonably high exposure to the banking sector via their existing pensions and stock market funds.



This week analysts at Oriel Securities reeled out a list of risks that threaten to thwart TSB’s ambitions. These include potential measures by the Bank of England’s Financial Policy Committee to cool the housing market – such as limiting loan-to-income ratios.

If interest rates remain low for a prolonged period, Oriel reckons many of TSB’s existing borrowers will be tempted to hang on to cheap standard variable deals, rather than switching to higher-margin fixed-rate loans.

Despite all the potential pitfalls, experts say TSB is well worth a punt for long-term investors with strong nerves.

Shares can be bought through most stockbrokers, including Killik, Charles Stanley and Hargreaves Lansdown. Hargreaves’ closing date for applications is June 17.

Read more: http://www.dailymail.co.uk/money/saving/article-2657374/Will-say-yes-discounted-TSB-shares-Lloyds-poised-sell-shares-eagerly-awaited-float.html

TSB is heavily reliant on the UK Housing Market. As such, I thought I would include a link to the following article which is quite relevant at this particular time:

House price growth predictions HALVED in London as eye-watering prices and stricter lending show signs of cooling the UK market

*New buyer enquiries rise at their slowest pace since February last year
*Banks must not 'throw petrol on the fire' with unsustainable lending, Vince Cable warns
*IMF warns that house prices are too high globally and need to be reined in
*Bank of England deputy governor Ben Broadbent raises concerns about rising house prices
*The booming property market is starting to show signs of calming down as potential buyers reject eye-watering prices and stricter mortgage rules take a grip, surveyors report.

Read more: Full article here

Well despite some misgivings I decided to have a punt on this. I mean what can go wrong with a bank? :)

Oh dear! ;o)

Challenger bank Aldermore gearing up for float
Telegraph
By Ashley Armstrong | Telegraph – 1 hour 37 minutes ag

Fast-growing retail lender set to break the summertime lull for listings with stock market flotation in coming weeks

Challenger (SES: E1:573.SI - news) bank Aldermore is gearing up for a stock exchange listing which is likely to make it one of the first major companies to debut on London’s markets after a summertime lull.

A stock market listing is expected within weeks, valuing the retail bank at between £800m and £900m. Aldermore, which focuses on “straightforward banking” to individuals and small businesses, is expected to raise between £400m and £500m.

The mortgage lender stunned industry experts in April when it reported an almost 15-fold increase in its pre-tax profits for 2013 while its lending and deposits business jumped by almost two-thirds. The company, which is only five-years-old, made pre-tax profits of £22.4m last year, compared to just £1.5m in 2012. The double digit growth in Aldermore’s return on equity was higher than every other listed UK bank.

Aldermore, which is owned by private equity group AnaCap and backed by Honeywell Capital Management and Ohio Public Employees Retirement System, raised a further £40m from hedge funds Toscafund and Lansdowne Partners at the start of the year. At the time, the hedge fund injection valued the business at more than £450m.

Sources said that work on an imminent stock market listing was nearing completion although a definite launch time had not been confirmed with the company’s management yet.

A main market listing typically takes four weeks from its formal announcement to the actual start of trading on London’s stock exchange.

AnaCap remains the majority shareholder and has already brought in Credit Suisse and Deutsche Bank (Xetra: 514000 - news) to advise on a potential flotation. It is expected that other banks will be added to the roster to manage the listing.

Aldermore will follow the London float of JC Flower’s One Savings Bank, which was valued at £413m in a June, the first UK bank to list for more than a decade after the now defunct lender Bradford & Bingley’s IPO in 2000. Lloyds Banking Group’s spin-off of TSB followed a month later in a carefully managed £1.4bn stock exchange float.

London’s listing market is expected to revive next month but investors have already fired warnings that they will not be prepared to support the same lofty valuations that were achieved at the start of the year.

Miller Homes IPO:
"In light of the recent financial markets volatility, the Shareholders of Miller Group have elected not to proceed at this time with a public offering of Miller Homes. The Shareholders are excited to support Miller Homes in its next phase of growth as the Company builds upon the momentum evidenced in its recent operational and financial results."

Aldermore IPO

Aldermore IPO pulled

This IPO promises an 8% yield

That one looks interesting skinny.

Cheers

IPO tempts with mammoth dividend