Homeserve (HSV) 970.5p

Gain to date: 43.7%

Original entry point: Buy at 675p on 24 March 2022

On 21 April business services group Homeserve (HSV) announced it had entered talks with Brookfield Infrastructure in relation to a potential offer.

Brookfield Asset Management is one of the world’s largest alternative investment management companies with $688 billion of assets under management.

There are a number of factors which make HomeServe a natural target for private equity ownership.

These include its inflation-protected, annuity like income streams. Specifically the defensive and recurring nature of its profits enable it to support higher levels of debt.

As a private company there are a number of actions that could be undertaken that would potentially be harder to execute as a listed company.

Brookfield now has until the close of business on 19 May 2022 to make a firm offer or walk away. The stock has gained 38% since Brookfield’s first approach.

Business services analyst David Greenall at Davy suggests the business could be valued at more than £15 a share.

SHARES SAYS: Hold tight and wait for details of the bid. 

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