Betaville Intelligence

WELL-DONE ALERT: FirstGroup said to ...

Thursday, 19 September 2019, 5:27 pm

Robert Tchenguiz, the British property entrepreneur and activist investor, is said to be increasing his stake in FirstGroup, the FTSE 250-listed bus and rail company, to over 4pc.

People familiar with the situation said Tchenguiz, who previously declared he owned 3.2pc of FirstGroup, now owns just over 4.2pc of the bus and rail company, sparking speculation he may ask the company to consider further corporate activity.

An announcement about the stakebuilding could be made imminently, said these people familiar with the situation.

A decade ago Mr Tchenguiz was a well-known activist investor in the United Kingdom, building multi-billion pound shareholdings in some of Britain's largest companies, such as FTSE 100-listed supermarket group J Sainsbury and Mitchells & Butlers, the pub company.

He would enourage management teams to look release value from their property portfolios or in some cases, such as with Mitchells and Butlers, bid for the companies outright.

People familiar with the situation said Mr Tchenguiz believes FirstGroup is undervalued because the market has lost belief in the company's strategy and the management team's ability to turn the company around.

One source said Mr Tchenguiz reckons significantly value could be generated from the sale of the company's US student business. This source pointed out that Canadian pension fund Caisse de dépôt et placement du Québec and Ullico Inc, the insurance and investment company, paid around 13 times EBITDA for Student Transportation Inc, a rival North American student bus company, but FirstGroup currently trades on a multiple of between 3 and 4 times EBITDA.

Coast Capital, one of FirstGroup's largest shareholders, previously suggested FirstGroup should sell its US student business and it's believed Mr Tchenguiz is backing the activist investor's strategy and ideas for the FTSE 250-listed company...


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