It's largely slipped under the news radar but today's agreed sale of wind power company Infinis (INFI) is another blow to investors, private investors in particular. The details of the deal can be read here, but in short, investors will get 185p per share cash, valuing the company at about £555 million. Given that the stock closed yesterday at 131.75p, very good deal you might think.
Not in the grander scheme of things though, and here's why. You might remember the company's fairly well trumpeted IPO back in November 2013, Shares looked at the company in detail just a month after it joined the main market. Guy Hands' private equity firm Terra Firma wanted to float a chunk of the company it owned outright, 31% was settled on in the end. Pulling in investors was a hefty £55 million maiden dividend plus the promise of regular and attractive payouts beyond.
Plenty of punters piled in, and they've been on a steady ride down ever since. Consider this, at IPO the company was valued at £780 million, and that was at the lower end of the valuation range it hoped-for. Priced at 260p per share, those shareholders are now being forced to crystalise a near-30% loss. On top of that, they are also being Shanghi'ed into accepting the loss of a valuable income paying stock. The forward yield still stands at 7.6% despite the long-run dividend payout policy having to be adjusted to reflect the capital intensity of the business and changes in government subsidies for onshore wind.
Interestingly, just nine months ago it was widely reported in the national press that Hands' Terra Firma were investigating ways to sell-down its 68% remaining stake in the business, not buy more. What's changed only they know. But given the private equity company's majority stake, one wonders why it's suddenly choosing to force out other investors. Presumably, to give it greater funding flexibility without the headache of promising to keep paying dividends. Either way, those investors that were woo'd into the IPO have every right to feel short-changed but the company, and Terra Firma.