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The defence investment packed full of shrewd investors
Investors may have the opportunity to back another wave of fund raising from a defence company that has attracted such shrewd interest.
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Investors may have the opportunity to back another wave of fund raising from a defence company that has attracted such shrewd interest.
At a time when the threat of state-to-state conflict is seen as less of a concern than international and domestic terrorism, a company that can build a leading edge in homeland security is likely to be a good bet for shrewd investors.
The stock that hits the mark here is homeland security specialist Digital Barriers, listed on the Alternative Investment Market, whose chief executive Tom Black has some serious pedigree in the field, not to mention heavyweight backers in the City.
Track record
When you have helped to grow your small cap defence stock from £60 million and overseen a successful sale to a larger competitor for £531 million in cash, it is fair to say you have probably earned your institutional backers.
This is what happened when Black’s security software mid cap darling Detica was sold to BAE systems in July 2008.
The deal saw Detica’s shareholders gain a premium of 57% to Detica’s 281p closing price the day before the news of acquisition talks broke.
Black, who holds a doctorate in nuclear physics, had worked in national security before joining Detica in 1984. He is widely credited with spearheading its push into the commercial sector and became chief executive in 1997, driving through Detica’s Candover-backed private equity management buyout.
Fast forward eighteen months and Black was back with a new company, Digital Barriers. The group was set up as a cash shell to acquire other nascent niche security companies that were involved in the growing demand for homeland security.
The combination of a proven management team and a strong growth story at a time of conventional defence budget cut backs made this a compelling story for investors.
With ominous rumours of Al Qaeda intending to replicate a Mumbai-style terrorist attack in Western Europe, the potential growth in a specialist able to harness security services to ward off such dangers seems clear.
March stock market launch
Digital floated at £1 on Aim in March 2010, and was pre-marketed to a tight group of institutional managers which included some of the shrewdest brains in UK small and mid cap investment.
It is currently trading at 2.01p, just off a year high of 215p, giving it a market cap of almost £50 million.
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2 comments so far. Why not have your say?
Edmond Jackson
Oct 27, 2010 at 13:08
No forecasts seem to be available (Company REFS) although presumably Investec would have them as company broker. Can be risky chasing tightly held stock in a market favourite but if one gets in at decent value then the risks transfer to others picking up on the story - as the institutions involved here must know only too well.
report thisrongagain
Oct 27, 2010 at 17:42
If you can get in at 2.01p you'll be doing very well.
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