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Capital structure reorganisation removes buying obstacle

IMImobile (IMO:AIM) 174p

Gain to date: 9.8%

Original entry point: Buy at 158.5p, 8 December 2016


This news might have been missed by many investors but IMImobile (IMO:AIM) is cleaning up its shareholder and capital structure. That might not seem meaningful but we think that getting shot of the old B shares could remove an obstacle that may have prevented some investors taking a stake. If so, expect further support to the rising share price.

GI Update IMIMOBILE 260117

Effectively, the company has raised £5.4m at 159p to buy shares from two founders (Viswanatha Alluri and Shyamprasad Bhat) and swap them for ordinary shares. The pair will have a combined 13% stake in the business going forward. The new simplified capital structure comprises about £105m of equity, at the current 174p, plus about £10m of net cash, giving an enterprise value (EV) of approximately £95m. That’s about 7.9-times the £12m of EBITDA (earnings before interest, tax, depreciation and amortisation) forecast by Investec for the year to 31 March 2018.


Good quality technology businesses regularly trade on EV/EBITDA multiples in the low to mid-teens. IMImobile has grown consistently and at the half year posted EBITDA growth of 17% on 16% organic revenues, with 94% on a recurring basis. (SF)

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