Investment group takes stake in Angling Direct
A group which invests in undervalued London Stock Exchange listed companies – has spent nearly £1m to take a three per cent stake in the UK’s largest fishing tackle retailer.
Kelso Group Holdings has bought 2.3 million Angling Direct shares at 35.1p per share. The investor noted that the retailer has 46 stores and an estimated 12% of the UK market, which it believes could grow towards 20%.
In a statement announcing the purchase, Kelso said: “Since its launch on the London Stock Exchange in 2017, Angling Direct has successfully grown its store portfolio from 15 to 46 and there continues to be a significant opportunity for it to grow its UK business towards 20% of the market.
“The European business is early stage. Despite 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 believes that Angling Direct has surplus capital and that some of the £17.1 million of net cash, being around 60% of the market capitalisation, should be used while the shares are at or close to the current level to buy back a portion of its equity to be returned to shareholders.
Kelso CEO John Goold added: “We are delighted to become a small shareholder in Angling Direct whilst acknowledging that the top four holders control 66% of the company. Given the potential growth of the business and its current low valuation, a sustained investor relations strategy along with a buy back would, in our view, significantly enhance value for shareholders.”
Kelso Group Holdings was established in 2022 to ‘identify, engage and unlock’ trapped value in the UK stock market. Its 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 look for situations where it believes the sum of the parts of a business is greater than the current value,” says the group.