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Mobeus VCTs - Gro-Group exit

Sophisticated and complex high-risk tax-sensitive investments in small companies: handle with care
james188
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Mobeus VCTs - Gro-Group exit

#108212

Postby james188 » January 5th, 2018, 6:18 pm

Excellent sale of Go-Group announced this afternoon by Mobeus, realising an investment in Gro-Group for £22 million in aggregate, plus (potentially) a few hundred thousand pounds more of potential deferred consideration. Across the board, this constitutes a 2.2 times original cost realisation and an IRR of over 20%. When the 2017/18 offer document came out only four months ago, Go-Group was conservatively valued at only £5.7million (down from £7.1 million initial cost), so a massive increase over that figure has been realised. Compare this to the Entanet realisation last year that returned 2.52 times the original cost and an IRR of 38% over there and a half years, which triggered bumper dividend payments.

The shareholder event in a few weeks should be a jolly occasion. Well done, Mobeus.

naflod
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Re: Mobeus VCTs - Gro-Group exit

#108389

Postby naflod » January 6th, 2018, 6:44 pm

Effect of the disposal on the latest NAVs:

Mobeus Income & Growth +1.34p
Mobeus Income & Growth 2 +1.54p
Mobeus Income & Growth 4 +1.55p
Income & Growth +1.68p

Nice uplifts all round

naflod

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Re: Mobeus VCTs - Gro-Group exit

#114960

Postby 127tolmers » February 1st, 2018, 3:28 pm

On Tuesday I attended this annual event at RIBA. They have a morning and evening session. About 200 shareholders were present at the morning session along with most of Mobeus's management and all 4 VCT chairmen. As usual at these events there were several Fools.

Mark Wignall, presented Mobeus and the VCTs. They have 22 professionals; 16 searching for new business and 6 working on existing business. (Martin Churchill's Mobeus review gives a very good time breakdown).

Since the new rules in 2015 post MBOs Mobeus have invested £33m putting them roughly in joint second place after Octopus. Of the new fundraises Northern was at 100%, Baronsmead at 98% and Mobeus at 88%. (For info Foresight 4 were only 8% complete). Mobeus expect to complete in the next 3 weeks. Statistics on their fund raise were:

578 investors (21%) investing the minimum of £6k
679 investors (24%) investing between £6k and £9.9k
1340 investors (47%) investing between £10k and £49.9k
201 investors (7%) investing between £50k and £99.9k
39 investors (1%) investing between £100k and £200k

The total of 2837investors split 1410 existing and 1427 new with an average spend of £24k.

Post fund-raising the 4 VCTs have a NAV of £270m with £135m in cash. They are discussing possibly moving from 4 to 2 VCTs but the 4 boards are very independent of each other and of Mobeus. The boards are uncomfortable with 2% management fees on cash and plan to enter into negotiations with Mobeus. They are also discussing moving from a 10% discount though one chairman thought 10% was too generous!

Mobeus pride themselves on their very low investee failure rate. Their worst exit was at 97%. Historically with MBOs they have used a loan equity mix, appointed a strong independent chairman, had a strong investment agreement and actively exercised their board nominee rights. They recognise that the new investment world will come with higher risk and higher failure rates but are very focussed on the downside.

Dealflow is still there but relatively expensive in the short term with competition from EISs. Brexit is having no impact on dealflow but they are seeing some impact on their SME investees who are customer facing or hit by currency impacts on supplies. They recognised that inability to secure loans on assets was unhelpful but they had tightened investment agreements to give more control.

4 years ago they switched strategy from just looking at deals brought to them to actively searching Companies House for likely companies to invest in. This is beginning to bear fruit.

They were most concerned before PCR that tax free dividends would be stopped. They paid out the maximum possible in advance.

When questioned as to why they were diluting existing shares with new money and not raising a new class they were very clear in saying how difficult it was to market a new class and even more so for a new VCT. The restraints on paying dividends in the first 3 years made them uncompetitive. Because of the new early investment rules they felt most VCT houses would now go for smaller but regular annual raises.

Trevor Hope, Chief Investment Officer ex Proven, spoke on new investments and 2 recent investee CEOs spoke; The MY Tutor Story and the Buster+Punch Story.

Clive Austin spoke on exits. According to Martin Churchill he spends 50% of his time on investee boards and 20% of his time on exits. The 2 exits he presented were Gro at 2.2x and Entanet at 2.5x. Unusually these were done in house with a single known potential purchaser. However their more normal mode is to appoint an agent and get a competitive bid situation.

An excellent feature of the Mobeus event is a seated lunch (23 tables of 10) with named individuals hosting each table. Apart from Mobeus and the board you could choose to sit with Philip Hare, Chris Lloyd, Kavita Patel or the presenting CEOs. I sat with Clive Austin. He was quite candid on the way exit plan expectations change and the need to refocus companies losing their way. He made the point that only experienced professionals could handle exits while new hires could be sent out to collect data for due diligence on new investments. It was hard to find these experienced professionals and independent chairmen who played an important role.

Overall a very good set of presentations and with reasonable time for a full and detailed Q&A session. The format remains fresh and the high attendance confirms its utility for VCT investors. Did anyone attend the evening session and get any different takes?

Karellan
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Re: Mobeus VCTs - Gro-Group exit

#114978

Postby Karellan » February 1st, 2018, 4:32 pm

A very useful insight tolmers , many thanks.

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Re: Mobeus VCTs - Gro-Group exit

#115489

Postby parallellines » February 3rd, 2018, 3:45 pm

Thanks for the report on the morning session, and yes I attended the evening with about 40 other investors. Unsurprisingly a lot of the content was similar, and there was a high overall level of investor satisfaction.

The focus of the evening session was very much about the challenges, for Mobeus and the industry, of deployment of the new money coming into VCTs. This year's Mobeus fundraise is intended to last for three years, so definitely no fundraising next year and probably not the year after. This year's fund raise was deliberately early and large because of the perceived risk of cuts to tax relief in the Autumn Statement. [Personally I don’t think Mobeus were the only ones that did this, and next year we will see fewer offers and the best ones filling in days again]

There was a suggestion that new investments may be more resource intensive, as they will be smaller and all need oversight.

With regard to the statistics of "top deployers" post 2015 referred to by tolmers , I wrote down the top four as Octopus some way ahead , then Puma ( really ??), Northern and Mobeus .

On realisations the message was that they are happy to hold older MBO investments for income, so expect lower dividends. There was also acknowledgement that they said this last year, and still ended up making large disposals when the right buyer and right price came along.

There was a sneaky throwaway remark about fireworks at the Baronsmead AGM which took place earlier the same day, but I wasn't able to stay after for drinks and enquire further. Would be interested to hear from anyone who attended though !

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Re: Mobeus VCTs - Gro-Group exit

#116391

Postby scotia » February 7th, 2018, 4:17 pm

The Income & Growth VCT Interim Management statement was published today:-
http://www.iii.co.uk/research/LSE:IGV/n ... xt=LSE:IGV
It included details of the Gro-Group Exit
On 19 December 2017, the Company realised its investment in Gro-Group Holdings Limited. £4.19 million has been received in cash by the Company while up to a further £0.14 million in deferred consideration is potentially payable over the next 12 months, of which £0.02 million was paid on 1 February 2018. Excluding deferred consideration, this transaction delivered the Company a realised gain over cost of £1.80 million, being 1.90 pence per share.

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Re: Mobeus VCTs - Gro-Group exit

#118230

Postby timbo003 » February 14th, 2018, 6:27 pm

Mark Wignall and Trevor Hope were presenting at the ShareSoc London Seminar last night
https://www.sharesoc.org/events/shareso ... don-feb18/

There were about 25 minutes allocated for the presentation followed by 20 minutes for Q&As. The event was recorded and the video should be available at the following link in a day or two:
https://www.sharesoc.org/events/recordings/

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Re: Mobeus VCTs - Gro-Group exit

#118565

Postby scotia » February 16th, 2018, 12:16 pm

The Income & Growth Trust issued a Dividend of 3p per share yesterday (15/2/18). For those of us in their DRIS, they issued shares at 70.9p. As all the old timers will know, this is a very generous DRIS scheme - effectively basing the price on the mid-market price, and not the NAV. The last published NAV of 31st December was 82.29p, so subtracting the 3p dividend, this makes it 79.29. So simply based on this calculation, 70.9p is a great discount. And if the NAV has actually risen because of the Gro-Group exit, its even better!

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Re: Mobeus VCTs - Gro-Group exit

#128554

Postby scotia » March 28th, 2018, 12:31 pm

Mobeus income & Growth VCT Annual Report to 31st December 2017 issue as an RNS today:-
http://www.iii.co.uk/research/LSE:MIX/n ... xt=LSE:MIX
NAV total return per share for the year = 8.6% primarily due to the sale of Entanet, Gro-Group and good revenue returns


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