GB Group

LN: GBG

£904m market cap

470p last close

GBG specialises in identity data intelligence. Its products/services enable customers to understand and verify clients and employees in fraud, risk management, compliance and customer on-boarding services. Based in the UK, it operates in 24 countries.

Investment summary

GB Group (GBG) has acquired IDology, a US identity verification business, for an enterprise value of $300m/£231m. It has placed 39m shares at 410p per share to fund £160m of the purchase price, with the remainder coming from a new credit facility. IDology adds domestic US data sets and more than 500 customers. We estimate that the deal offers significant cross-selling potential and will boost GBG’s international revenues to close to 50%. We expect it to boost FY20 revenues by 19%, and eIDV divisional revenues by 52%. GBG expects the deal to be earnings enhancing in FY20 – we forecast 3% diluted EPS accretion

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 87.5 18.7 16.5 9.9 47.5 37.9
2018A 119.7 28.7 25.8 13.5 34.8 22.4
2019E 137.7 30.2 26.6 13.1 35.9 41.1
2020E 192.8 46.9 40.3 16.1 29.2 21.3
Last updated on 22/03/2019
Industry outlook

Globalisation and the growth in internet trading have also resulted in the need for higher compliance standards in light of the rising scope and financial impact of cybercrime. This, in turn, is driving the demand for more complex and comprehensive solutions for the verification of personal data.

Last updated on 22/03/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net debt (£m) 71.6
Forecast gearing ratio (%) 22
Price performance
%
1m
3m
12m
Actual (5.4) 8.2 17.8
Relative* (5.5) 0.7 14.9
52-week high/low 626.0p/395.0p
*% relative to local index
Key management
David Rasche Chairman
Chris Clark CEO
Dave Wilson FD

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