Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Shares in home repair specialist surged following the news of a potential approach from Canadian firm Brookfield Asset Management
Thursday 31 Mar 2022 Author: Mark Gardner

Homeserve (HSV) 880p

Gain to date: 30%

Original entry point: Buy at 675p, 24 March 2022


Just as soon as we had recommended home repair services group Homeserve (HSV) as a buy on 24 March, its shares jumped sharply following news that Brookfield was considering a possible offer for the group.

Brookfield Asset Management is one of the world’s largest alternative investors with $688 billion of assets under management.

There are a number of factors that make HomeServe a natural target for private equity ownership. These include its inflation-protected, annuity-like income streams. Specifically the defensive and recurring nature of its revenue enables it to support higher levels of debt.

A recent industry transaction, whereby American Water disposed of its US Homeowner Services Group, suggests there could be further upside in Homeserve’s share price.

The sale in 2021 for $1.27 billion, equated to enterprise value per customer of $850, and an EV to EBITDA (enterprise value to earnings before interest, tax, depreciation and amortisation) multiple of 15 times.

Using this same EV to EBITDA multiple it would imply a Homeserve share price of £10. Alternatively using the $850 value per customer generates a value of £14.50.


SHARES SAYS: Sit tight and see how the bid situation plays out. 

‹ Previous2022-03-31Next ›