Business Irish

Thursday 26 April 2018

Private equity firm TVC 'unlikely to make investment' in 'broken' market

Peter Flanagan

Peter Flanagan

PRIVATE equity firm TVC is unlikely to make a significant investment before the end of this year, as long as valuations remain at what the company believes are too high a level.

Speaking at the firm's AGM in Dublin yesterday, executive chairman Shane Reihill said that while the company had looked closely at a number of investments so far this year, it would be content to wait for a deal that suits the business.

"The state of the market at the moment is there are no transactions. The private equity market is broken in Ireland at the moment, so until the banks decide to start dealing with their portfolios, we're just going to have to be patient.

"We believe that there are restructuring opportunities in Ireland and the UK, where companies with excessive debt need to raise new equity at attractive terms for new investors.

"We've looked at a lot of things but nothing that would be shareholder-value enhancing.

"The macro picture is driving our strategy of protecting our cash in German government bonds and taking a lower yield in exchange for safety.

"We've looked at a number of deals but when the banks are lending at two times cash flow but looking to sell at 12 times we have a problem," he added.

The company was criticised at the meeting for not pursuing a share-buyback strategy at a time when it may make financial sense to do so, but Mr Reihill said the business was not under pressure from institutional investors to follow such a strategy.

Cash balance

"Buybacks are an option but we have chosen not to do so. Our cash is getting more valuable in this environment and our bet for the last four years is this has been an asset-deflationary environment. I haven't seen many places to put money," he claimed.

"Given our significant cash balance and no debt, the company is in a very strong position to make additional long-term investments at what we expect to be attractive valuations, adding further value to our investment portfolio," the firm added.

Meanwhile, TVC fell 1.2pc to 82c in Dublin.

Irish Independent

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