Northill Capital, the group founded by former BNY Mellon vice chairman Jon Little, has launched a takeover bid for Alpha Strategic, which finances hedge funds.
Alpha Strategic is already 51% owned by Northill, and has revealed that it received an offer today from Northill to acquire the remaining shares for 25p each, a slight premium to yesterday’s closing price of 19p but far below the 120p level at which Alpha Strategic floated in 2005.
Alpha Strategic’s board confirmed that it was ‘considering this approach and will make a further announcement in due course’.
Founded by former Man Group executive Colin Barrow and Kit Malthouse, currently London’s deputy mayor, Alpha Strategic’s model is to provide cash to hedge funds in return for a share of the fund’s future revenues. A hedge fund will typically seek such financing in order to provide liquidity, such as for an investor’s exit, if its underlying strategy is illiquid. It has entered revenue-sharing arrangements with Winton Capital Management and IKOS Asset Management.
Northill, which is backed by the billionaire Bertarelli family, first bought into Alpha Strategic in 2011 at a price of 53p per share.
Alpha Strategic earned revenues of £493,000 for the year ended 31 March 2013, but posted a net loss of £2.2 million following a goodwill impairment charge related to the termination of its agreement with IKOS. It nonetheless still boasts a cash balance of £2.4 million and has stated that it is in ‘advanced discussions’ with four more funds.