McGrath's biggest institutional backer, Perpetual reduces its shareholding

McGrath's biggest institutional backer, Perpetual reduces its shareholding
McGrath's biggest institutional backer, Perpetual reduces its shareholding

McGrath's biggest institutional backer, Perpetual has further reduced its shareholding in the listing estate agency.

It has sold shares between May 6 and May 29 which took its shareholding down to 7.48 percent.

It had been sitting on 9.04 percent.

Its sale of the 2.6 million shares caught a recent spike following the post election property optimism.

Its shares have risen from a record 20.5 cents low, just before the election, to its current 28 cents level, where it has been since last Wednesday.

In March last year Perpetual sold almost 2.5 million McGrath shares that reduced its stake to 11.6 percent from 14.2 percent.

There has been no advisory from Perpetual on its declining stake.

No doubt one recent factor has been the initial listing stockbroker Bell Potter ceasing its coverage of the estate agency, which means analysis of the stock is no longer done by any stockbroker. 

It was in the 2015 float at $2.10 that Perpetual emerged as a surprise major backer of the McGrath Estate Agents’ initial public offering.

McGrath began public life as a company worth $282 million, which has dipped, along with property prices and fewer star agents, to $47 million.

At $2.10 per share, it equated to 8.8 times forecast earnings before interest, tax, depreciation and amortisation for fiscal 2016.

The fund managers liked McGrath’s cashed-up position, and its opportunities to expand in a highly fragmented industry.

McGrath shares slumped to $1.72 on its second day of trade in late 2015 with Perpetual taking so-called advantage to increase its shareholding to 9 percent from its initial holding of about 6 percent. 

In September 2017, when McGrath shares were trading at 64¢, Perpetual, along with fellow fund manager Argo, lifted their stake in the real estate group.

The 2017 acquisition saw Perpetual acquire six million shares, taking its overall stake to 14.16 percent from a previous 10.05 percent.

The biggest shareholder remains John McGrath, followed by Aqualand and Tony Denny.

With the company now capitalised at $47 million, McGrath's personal stake is worth a little over $10 million given his near quarter holding.

The float allowed him to pocket $37 million, some of which he quickly spent buying further shares in the agency.

Last March the Central Coast-based property developer, Tony Denny amassed a 5 percent shareholding as a "passive long-term investment" paying around 40¢. Denny spent $3 million on 7.2 million shares in March last year which took his holding to five percent. 

Aqualand took its stake in June last year.

They paid 42.5 cents a share for their 25,189,880 shares which totalled $10.7 million.

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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