One of the City’s best known asset managers has accused a Wall Street private equity firm of “ram raiding” the London stock market, after the US investor pulled off an ambitious swoop for a promising Cambridge-based tech firm.
Columbia Threadneedle claims to have been blindsided by KKR’s successful $396m (£313m) move for the AIM-listed IQGeo last week, despite its 13 per cent stake in the tech firm.
“Although the financial metrics of KKR’s offer are very high, we do not believe it fully realises the long-term growth potential of IQGeo,” said James Thorne, UK equities fund manager at Columbia Threadneedle, in an interview with The Sunday Times.
The heavyweight asset management firm feels particularly aggrieved because even though the bidding process, which is being overseen by the The Takeover Panel, started months ago, it only became aware of KKR’s move days before the recommended takeover was announced by IQGeo’s board.
This was partly due to the unusual approach KKR used to make its offer.
Rather than bringing in lenders to finance the bid, the New York-based private equity firm, which also owns majority stakes in the beauty firm Wella and the German publisher Axel Springer, is funding the entire takeover itself.
External lenders will often only finance a bid if a take private bidder conducts the acquisition through what is called a ‘scheme of arrangement’. This mechanic requires 75 per cent approval from the target company’s shareholders.
But by financing the loan, KKR has avoided being forced into a ‘scheme of arrangement’, thus weakening Columbia Threadneedle’s hand in objecting to the deal.
Other major shareholders at IQGeo, Kestrel Partners, Charles Stanley and Canaccord have all backed the takeover.
The bid represented a 48 per cent premium to IQGeo’s 12-month volume weighted average share price, and a 19 per cent premium to the closing price before the bid was made public.
“IQGeo is a great example of the kind of company we look to invest in,” Thorne said. “KKR has seen the same potential in the company we did. IQGeo is now well-funded, generating significant revenue and profit growth with the potential to become many multiples of its current size.”
A spokesperson for IQGeo told The Sunday Times: “The board believes that the 480p share offer from KKR, which crystalises an 11 times return over the last five years, represents highly attractive value for shareholders.”
KKR was approached for comment.