Raven Property targets 28.5% share capital repurchase from Invesco AM
Repurchase at 46% discount to NAV
Raven Property is set to repurchase 28.5% of its share capital from Invesco Asset Management at a 46% discount to its 67p NAV, subject to shareholder approval.
The Russian property investment firm, which had been a holding of Woodford Investment Management funds, prior to its collapse, has entered into a conditional agreement to an off-market purchase in cash of 139.6m ordinary shares from Invesco at 36p each.
Raven Property shares represented 1.8% of Woodford's Income Focus fund as at 31 July and 0.6% of Equity Income as at 30 June, but was not held in the Patient Capital Trust, according to the firm's annual report.
Woodford was reportedly forced to take a £15m hit on the sale of two lots of preference shares in Raven Property, after selling at a discount to the market selling price.
Raven Property bought back the equivalent of 14.8% of its market cap from both Woodford and Invesco in August, according to Numis Securities Research. The firm then bought back an additional 2% from Invesco in October.
It follows Invesco's decision to shift to a 'co-head' model with Mark Barnett joined as head of UK equities at Invesco by Martin Walker on 1 January 2020, amid continued poor performance from Barnett's funds and investment trusts.
Ordinary shares in Raven Property represented 0.6% of Barnett's Invesco High Income as at 30 June, with 0.5% in preference shares.
Meanwhile, Invesco Income allocates at total of 1.6% of its portfolio to a combination of ordinary shares and preference shares.
Raven Property's board said the latest repurchase, which is scheduled to be completed in January, said there would be an uplift from transaction as a result of repurchasing shares at a discount, with November's pro-forma NAV boosted to 89p, a 32.8% increase from 30 June.
Commenting on the move, Numis said that while it is "not in favour of repurchases that target specific shareholders, rather than offering all shareholders an exit on the same terms", it can see the "benefits of removing the overhang of a substantial shareholder seeking an exit".
It added: "Shareholders will benefit from substantial accretion to NAV due to acquiring shares at a substantial discount.
"We estimate the proposed buyback will add c.15p, c.20% to the NAV (after prior uplifts).
"Further details will be announced about financing the repurchase, although we note that the company has flexibility on the balance sheet (sub 50% LTV) which should allow the company to secure funding for the transaction against its high quality, high yielding asset base (£1.3bn value at 30 June)."
Invesco declined to comment.
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