Kelso Group Holdings PLC on Monday said it had purchased a 3.2% stake in TheWorks.co.uk PLC for around £626,000 in its second investment.
The London-headquartered investment company, which backs UK small and mid-cap companies, said it purchased 2.0 million shares in the Birmingham-based discount retailer at an average price of 31.3 pence per share.
‘Kelso believes that the business proposition of TheWorks is strong with its focus on affordability and that the valuation is highly attractive,’ the company explained.
TheWorks in August reported pretax profit of £5.0 million for the year ended April 30, down from £14.2 million. Revenue increased to £280.1 million from £264.6 million.
Kelso said it was ‘supportive’ of the company’s current board, and voted in favour of most resolutions proposed at its upcoming general meeting on October 4. However, it said it did not support TheWorks’s proposal of a 1.6p per share final dividend, but that share buybacks would be a better use of its cash.
Kelso said it ‘believes strongly’ in TheWorks’s product range and strategy, adding: ‘We are very excited about our new investment and helping restore the intrinsic valuation of TheWorks which we believe is significantly higher than the current price.’
Kelso’s initial investment was in Manchester-based e-commerce company THG PLC, in which it holds around 8.0 million shares.
Shares in Kelso were up 1.4% at 2.18 pence in London on Monday. Shares in TheWorks were up 1.6% at 36.18p.
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