Electra Private Equity’s investment objective is to follow a realisation strategy, which aims to crystallise value for shareholders through balancing the timing of returning cash to shareholders with maximisation of value.
On 16 September, Electra Private Equity (ELTA) issued a trading update for its largest remaining hospitality brands, Fridays and 63rd+1st, and named the board members for Hostmore, the parent company of those brands. ELTA’s board confirmed its intention to demerge Fridays – the largest of the two operating businesses (74% of ELTA’s NAV) – onto the Main Market of the London Stock Exchange (initially announced in May), early in Q421. The board aims to transition the remaining company, Hotter Shoes (10% of ELTA’s NAV), to AIM, renaming it Unbound. ELTA has been following a realisation strategy since October 2016, when it had a market cap of c £1.1bn, and has since returned c £2bn to shareholders. Since our initiation note published in December 2020, ELTA’s NAV has appreciated c 45% from £135m to £197m. The market capitalisation of c £222m and a c £320m management valuation for Hotter and TGI Fridays (excluding cash, see below) implies further upside for ELTA’s share price.