LONDON: CIP Merchant Capital announced its investment in Vertu Motors plc, the new and used car dealership operating in the UK.
The Company has acquired, in aggregate, 1,549,924 ordinary shares of 10p each in Vertu, representing approximately 0.42 percent of Vertu’s issued share capital, for a total consideration of approximately £625,553.
For its financial year ended 29 February 2020, Vertu achieved revenue of £3.1 billion, a gross profit of £334.1 million, an operating profit of £16.5 million and a net profit attributable to its equity holders of £3.0 million.
For the six months to 31 August 2020, Vertu achieved revenue of £1.1 billion, a gross profit of £129.5 million, an operating profit of £9.6 million and a net profit attributable to its equity holders of £2.5 million, and as at 31 August 2020, Vertu had cash and cash equivalents of £103.0 million and net assets of £265.8 million. Currently, Vertu has a market capitalisation of approximately £169.5 million.
The CIP Merchant Capital Board notes the rapid development of enhanced omni-channel functionality in the selling of vehicles to private customers implemented by Vertu, which is at the forefront of the sector. The CIP Board believes that this transformation of its business model puts Vertu in a strong position to benefit from the UK economy’s recovery phase.
For this reason, whilst it is noted that Vertu operates outside of the core target investment sectors stated within the Company’s investing policy, Vertu nevertheless meets a number of the Company’s other key investment criteria in line with its investing policy and in the CIP Board’s view represents a strong opportunity to create shareholder value in line with its strategic objectives.
CIP Merchant Capital also notes the announcement released on 30 April 2021 by Pollen Street Capital Limited in relation to a recommended acquisition by Cafe Bidco Limited for the entire issued and to be issued share capital of the Proactis Holdings plc at a price of 75 pence per ordinary share in Proactis.
As CIP holds 2,825,000 ordinary shares in Proactis at an average cost of 32.82p per share, the Offered Price represents a potential £1.25m profit, or a 128% return on capital.