Britain’s Blue Prism becomes the latest target for US private equity

Britain's Blue Prism becomes the latest target for US private equity

Employees walk past FTSE AIM stock price information displayed on an illuminated rotating cube in the atrium of the London Stock Exchange Group offices in London, UK

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Robotics firm Blue Prism has become the latest in a line of UK companies to come to the attention of US private equity firms, but a prominent shareholder has urged it not to sell.

Blue Prism shares surged on Wednesday after confirming it had entered into talks with TPG Capital and Vista Equity Partners. However, he insisted: “There is no certainty that an offer will be made, nor can be certain under what conditions an offer will be made.”

It comes after supermarket chain Morrisons, infrastructure conglomerate John Ling and aerospace company Cobham have all been the subject of a transatlantic private equity approach in recent months.

Blue Prism, one of the largest tech companies in the London Stock Exchange’s AIM market, uses robotic process automation (RPA) software to hire a digital workforce to perform back-end tasks. office for companies.

However, in a letter sent to Blue Prism’s management team on Tuesday, seen by CNBC, shareholder Coast Capital, a notable active investor behind protests against FirstGroup’s sale of its US business, said of his concerns about the valuation of the company. Express.

Coast Capital believes that Blue Prism is currently undervalued and that it would be a mistake to accept a share price acquisition.

“As you are well aware, the enterprise value of Blue Prism Plc is currently valued at nearly three times the forward revenue – 80% to 90% off its peers including UiPath, Appian, WorkFusion, Automation Anywhere, etc. The letter from Coast Capital said.

“If a buyer paid a 100% premium, the share price would still be well below its intrinsic value and below the level where the shares were trading in January 2021.”

Coast Capital CEO James Rasteh said Blue Prism faces a number of issues – such as gaps in its product portfolio, its position at the Junior Stock Exchange in London and its geographic distance from several key customers – but these could be overcome. East. He said Coast was working with experts in the field to design an operational improvement plan to drive revenue growth and the share price of Blue Prism.

“Additionally, we note that the team at Blue Prism plc (including management and board) has built and maintains the world’s first unattended automation software product with a highly regarded customer base of over 2 000 large companies, ”said Rastath. he said.

“Even at its worst time, the company enjoys an enviable reputation as a leading player and, as a result, remains a leader in its rapidly growing and highly profitable industry. Now, no time to throw in the towel!

Blue Prism declined to comment. TPG Capital and Vista Equity Partners were not immediately available for comment when contacted by CNBC.

“Reverse activism”

Where Coast Capital is publicly Pushing for leadership changes at FirstGroup, Rasteh told CNBC in an email Thursday that the company’s engagement with Blue Prism was “the opposite of activism,” saying he was working with management to put implement the necessary operational changes. plan to work.

Coast Capital’s stake in Blue Prism is just under 3%. Jupiter Fund Management, which declined to comment, is its largest shareholder with a 7.49% stake, according to data from Refinitiv Eikon.

Shares of the company rose 39% on Wednesday, but remain down nearly 30% for the year.

“CEO Jason Kingdon is clearly a visionary in the UK high tech industry, and hasn’t had enough time to make the HR changes and operational reforms that can and will replace Blue Prism.”

Kingdon was an early investor in Blue Prism and became its chairman and CEO in April 2020.

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