New research from MBH Corporation plc, a UK headquartered listed diversified investment holding company that acquires successful, well established small to medium enterprises across multiple geographies and sectors, reveals that 94% of institutional investors and IFAs believe the small and micro-cap sectors currently represent good opportunities for investors.
Some 86% say investors should increase their allocation to these markets, but that micro-caps could become more attractive when compared to small enterprises in general. Micro-caps often trade at a significant discount to the wider small cap universe, and 74% expect this to increase. A key reason behind this is that coverage of the micro-cap market from brokers and research houses is falling, partly due to MiFID II, and 94% of professional investors interviewed by MBH Corporation expect it to fall further over the next 12 months.
Callum Laing, CEO of MBH Corporation plc: “The Coronavirus has had a more severe impact on the share price and valuations of smaller businesses than larger ones, but there are still many very profitable and well-run small enterprises that now represent excellent value for investors. With less coverage from brokers and research houses on these sectors, attractive investment opportunities here will increase.”
At the end of May, MBH Corporation PLC released its annual report for the year ended 31 December 2019, revealing that it achieved a sales growth of 306% to GBP 50.8 million (2018: GBP 12.5 million) and a net profit of GBP 3.6 million – an increase of 190% compared to the previous year (2018: GBP 1.3 million). It also confirmed its first dividend of EUR 0.5 cents corresponding to a dividend yield of 1%.
MBH’s target well established companies that are generally debt free, delivering around $1m-$10m US dollars in EBITDA and are generally still run by their founders.
By leveraging its unique Agglomeration™ strategy, MBH can create substantial shareholder value through the consistent and accretive acquisition of excellent companies. With Agglomeration™, profitable companies convert their private shares into public shares in MBH Corporation plc at an agreed multiple.
Fixed for 365 days, company owners are then incentivised to accelerate their growth trajectory using the resources of the plc including expertise, skill transfer of best in class practices, cross-selling to other group companies and where appropriate, zero cost funding for new growth projects.
Each group company retains its autonomy by following appropriate Corporate and Financial Governance, and business owners are also incentivised financially to enhance shareholder value. As shareholders, they benefit personally from this.