10/03/2008
India-focused investor Eredene has changed tack after spying potential in limiting its focus to ports and logistics rather than its broader previous fixation with property development.
The unwanted properties built up under the erstwhile strategy have been offloaded for £9.75m. Says chief executive Alastair King, previously a managing director of AIM-listed Galahad Gold: ‘We sold at an internal rate of return of 34% and then started again.’
The choice of this new direction was serendipitous as P&O’s takeover by Dubai Ports World squeezed out its Indian ports team. ‘We scooped them up and now have a pre-built team of six that know the industry like the backs of their hands,’ laughs King. ‘So the main body of investment will be in logistics property, but we still have real estate expertise and remain open to other good deals when we find them.’
Eredene’s new team, headed by shipping expert Nikhil Naik, has since committed 66% of its funds, equivalent, says King, to $72m (£35.8m), and has $30m more to spend, with the ability to leverage those funds with debt. Stakes range from 40% to 90% in the five projects so far acquired, of which three are operational and yielding rents ‘in double figures’.
Thanks to its pre-fabricated expertise in this quieter of India's property sub-sectors, fickle Eredene, at 19p, down from a 12-month high of 25p, has potential. But caution is advised at least until evidence of progress emerges in imminent final results. Avoid for now.
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| Market cap: | £46.5m |
| PE Forecast: | n/a |
| Share price: | 19p |
| AIM | £25.08m |
10.25p
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| Other company articles: |
| 01/07/2008 |
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