Cinven sell off sickens Spire
IF in doubt, get out. Spire Healthcare’s boss Rob Roger may have recently said that he did not expect the outcome of the General Election on May 7 to make a large impact on the private hospital operator’s business, but its biggest shareholder obviously decided it was better to be safe than sorry and sold another big slug of its shareholding.
Spire’s shares collapsed 37.10p or 10pc to 330p after JP Morgan raised £136.4m for private equity group Cinven after placing 40.1m shares at 340p a pop with various institutional investors.
Cinven still sits on 38.3pc of the business and has promised not to sell another share for 90 days. Cinven has already made a tasty profit after floating the company at 210p in July 2014. Spire wheeled out a solid set of maiden results last month showing revenues up 12pc at £85m and operating profits 2.7pc higher at £114.1m. In February it received planning permission to build a £63m hospital in West Didsbury, Manchester.
Three quarters of its NHS business comprises of ‘choose and book’ referrals, where patients decide from a list of services which to use for a particular procedure. Income from private healthcare makes up 70pc of revenues.
Coincidentally, another FTSE 250 healthcare stock found itself in the casualty ward after a major shareholder jumped ship. Al Noor Hospitals, the private hospital operator which runs three hospitals and 17 medical centres in Abu Dhabi and elsewhere in the Gulf, slumped 87.5p or 9pc to 905p.
It followed news that Ithmar Capital, the Dubai-based private equity firm, had asked Deutsche Bank to place its remaining 20pc stake of 23.4m shares at 925p with institutional investors. Ithmar last sold a 7.3pc shareholding at 1030p in September. Again a tasty turn seeing as the stock was floated at 575p in June 2013. Al Noor has benefited from the introduction of compulsory health insurance in Abu Dhabi in 2007. The scheme, which was rolled out in Dubai, covered 98pc of emirates inhabitants. Many suffer from obesity and diabetes.
The Footsie was chipper, closing 10.96 points better at 7075.26 after the UK saw no inflation in the economy for a second month. Indeed, core inflation, the figure that strips away food and oil, fell to 1pc, its lowest since July 2006.
Erratic Wall Street advanced 50 points in initial response to stronger-than- expected first-quarter numbers from JP Morgan Chase but swiftly fell away to trade 40 points lower after US retail sales figures did not match the most bullish expectations. It then rallied into the close, finishing 59.66 points up at 18,036.70.
The latest Bank of America/Merrill Lynch Fund Manager Survey does give some cause for concern as it says that the proportion of global investors saying equity markets are overvalued has reached its highest level since 2000. Some 25pc responding to the survey said that equities are overvalued, up from 23pc in March and 8pc in February. The figure is still well short of the record high level of 42pc in 1999.
Revived bid talk pumped up the volume at industrial engineer Weir, 91p better at 1880p. Dealers believe its lucrative position in US shale could attract a competitor looking to increase scale. Responding to a rise in metal prices, Anglo
American rose 40.8p to 1039.5p and BHP Billiton 43.5p to 1459.5p. Glencore, now free to have another pop at Rio Tinto (78.5p up at 2892.5p), closed 8.2p dearer at 293.35p. Profit-taking after recent strength left
Shire Pharmaceuticals 145p lower at 5535p. It recently touched a peak of 5755p after the US Food and Drug Administration, the Big Daddy of all regulators, gave its dry eye treatment Lifitegrast priority review status.
Aberdeen Asset Management declined 12.7p to 493.8p following an RBC Capital Markets downgrade to underperform and 4pc cut in target price to 455p. Analyst Peter Lenardos has reduced his earnings per share forecasts too, by 8pc for 2015, 4pc for 2016 and 5pc for 2017. It reflects higher net outflows and a lower revenue yield than previously expected. He believes Aberdeen’s equity net outflows more-than-doubled from £0.9bn to £1.9bn in the three months to endMarch 2015.
Soco International, which has oil and gas interests in Vietnam, gushed 16.2p to 197.4p on vague bid talk. Tullow Oil soared 29.1p to 368.6p after Citigroup upgraded to buy and lifted its target price to 433p. Down from a May 2014 high of 918p, the group surely must be attracting the attention of bidders, including BP, 0.05p easier at 470.95p.
Petards rose 1.38p to 11.75p after being awarded a £600,000 contract by a UK defence systems contractor to provide test equipment for use on a Ministry of Defence programme. ÷ TLA, the sports agency whose clients include Olympic champions Sir Chris Hoy and Becky Adlington, reported stellar 2014 results. Full-year revenues were 12pc higher at £14.2m and adjusted operating profit was 24pc up at £6.2m. The dividend is lifted to 0.8p a share. Strong growth is expected to continue in the sports marketing division in 2015 after an 80pc gain in earnings last year. Shares fell 0.25p to 42.75p. Numis has a target price of 62p.