UK-listed tech company receives take-private offer amid complaints that London investors have failed to support digital start-upsKape Technologies has become the latest UK-listed tech company to consider leaving the UK stock exchange after receiving a £1.25bn takeover offer from majority owner and Israeli billionaire Teddy Sagi.
Sagi, who also controls Camden Market London and co-founded betting software company Playtech, attributed Kape’s “thin stock exchange trading” to his decision to try to take the company private.
Kape’s shareholders, which are listed on London’s junior market will receive 285p per share. This will bring the business to PS1.25bn. Kape shares rose 12 percent to 290p Monday morning.
The digital security software company, if approved by the remaining shareholders, will join a growing list of UK-listed tech businesses that have been taken over in recent years. These include industrial software group Aveva, and cyber security group Avast.
Bankers and founders of companies have complained that investors on the London stock exchange don’t value promising tech companies enough and instead have focused their attention on larger companies with stable dividends.
“Having considered the pros and cons to a public listing in light of the current macro uncertainties, thin stock market trading, and new growth avenues, and weighing the pros and disadvantages of it,” Sagi stated in a statement.
When it revealed a similar take-private deal from Mayfair Capital, Seraphine, an online retailer, blamed the “substantial cost” of being listed in the UK. Seraphine was among 33 tech initial public offerings. All but one are now trading at deep discounts to their original offer prices.
The takeover activity will counter the excitement generated by the FTSE 100 reaching a record high last Wednesday. The rally was partly based on investors’ demand for international companies in banking, mining, energy and industrials rather than smaller tech stocks.
Although the UK government attempted to make it easier to start-ups to access the public market via a series stock exchange reforms, last year’s slump in investor interest for IPOs slowed companies from taking advantage of the new rules.
Kape rejected Sagi’s 265p share proposal as “insufficient value” to shareholders before Christmas. The board gave Unikmind, Sagi’s investment vehicle, limited access to information about the business and its prospects in order to encourage a higher offer.
Unikmind made a revised proposal for January at 285p per share. To delist its shares from Aim, it needs to have 75% of Kape’s total voting rights. The board of Kape has instructed shareholders not to act for the moment.