Saba Capital has bought a 5% position in Grainger (GRI), the £1.1bn residential landlord that has been trading at around a 50% discount to net asset value. Shares in the company rose 4.2% to 159.7p after the activist hedge fund’s stake, mostly held in swap derivatives, was disclosed yesterday afternoon. Saba completed buying the position on 4 June and notified Grainger on Monday. Last month, Mike Ashley, founder of Frasers (FRAS), the Sports Direct owner, bought a 4.2% stake in the company.
Richard Williams, senior analyst at QuotedData, said: “Strap in, this could get interesting. Saba’s interest in build-to-rent specialist Grainger has echoes of its campaign against Workspace, where it has requisitioned to replace the entire board and push for a wind down of the company. If, like Workspace, it is targeting Grainger due to its entrenched wide discount to NAV hoping to sell off assets at a price closer to NAV, I question its tactics. It would be selling into an investment environment on its knees due to heightened uncertainty over inflation and interests rates (which has put renewed pressure on property investment yields and valuations). What adds to the intrigue here is that Mike Ashley has also been building a stake in Grainger, now at 4.2%. Could a most peculiar battle commence between US hedge fund and UK high street mogul for the residential landlord?”
Workspace (WKP), the flexible office space provider fighting efforts by activist Saba to wind it down, has cut its final dividend by 12.1% to 16.7p per share, down from 19p, reducing the total pay-out for the year to 31 March by 8.1% to 26.1p from 28.4p. The declaration came in annual results showing a 7.1% fall in net rental income to £113.4m as the company sold non-core properties and recycled its capital into better opportunities. “We have an exciting opportunity ahead to reposition our business and elevate our offer, work that has already started, so that we fully address the changing needs of occupiers today,” said chief executive Charlie Green. There was no mention of the general meeting requisitioned by 21% shareholder Saba to replace Workspace’s board.
Matthew Read, senior analyst at QuotedData, said: “Workspace’s results underline the scale of the task facing the new leadership team, but also the opportunity. In an attempt to fend off Saba, the new managers have set out a clearer, more earnings-focused strategy and should be given time to deliver on their plans. We would urge shareholders to dismiss attempts to wind it down.
“Workspace still has a distinctive London portfolio and demand from SMEs remains resilient. The medium-term ambition of more than £125m of trading profit before interest gives investors a useful yardstick, to measure the team’s progress. For now, the balance sheet is manageable, the assets remain attractive and the strategy looks credible, but shareholders will need patience while management proves that the portfolio can be repositioned without putting too much further pressure on near-term earnings.”
Molten Ventures (GROW) has invested €30m into the €270m series-D funding round announced by Isar Aerospace, a German satellite launch company that it described as “one of the most significant opportunities” in the European space technology sector. Molten shares yesterday jumped over 17% to 630.5p, lifting its value to £1.1bn, after ICEYE, a holding, announced a quadrupling in its valuation to over €10bn following the Finnish satellite operator’s latest funding round.
International Biotechnology Trust (IBT) and Biotech Growth (BIOG) were small beneficiaries of GSK’s $10.6bn acquisition of US cancer drug developer Nuvalent yesterday. Announcing its biggest ever purchase, the UK drugs company said it would pay $124 per share in cash to shareholders in the Boston-based company, a premium of 40% to the last closing price. Nuvalent was 0.4% of IBT’s net asset value and 1.5% of BIOG. This is the sixth bid both trusts have seen for portfolio companies this year. “With the drivers of robust M&A activity firmly in place, we expect deal flow to remain strong and will continue to position our portfolio to benefit from ongoing activity and deliver returns to shareholders,” said Schroders fund managers Ailsa Craig and Marek Poszepczynski.
Office developer Helical (HLCL) has completed regears and a new letting across six floors at The Bower near Old Street, London, with two of its biggest occupiers Fin (formerly Intercom) and Fresha. The deals involving 60,000 square feet of space will generate £4.5m of annual rent.
Tritax Big Box REIT (BBOX) now expects the Ministry of Housing, Communities and Local Government to announce the planning decision on its data centre at Manor Farm, Heathrow on or before 7 July.
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