Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Managing complexity – A buy enters the Citadel (ASX:CGL)
Pacific Equity Partners is looking to acquire 100% of the Citadel Group (ASX: CGL) in a transaction worth $503 million. PEP is planning to provide funding to help Citadel expand its global footprint and to develop new products in specialist software and critical-secure information management for its customers in healthcare, defence and national security, government and tertiary education.
With the tagline ‘managing complexity’ and a name associated with a fortress, CGL has built a business on integrating technology into the most important functions within the healthcare and government sectors. Its ability to protect data, but also leverage this data to push forward with innovations ranging from facial capture and number plate recognition, has piqued PEP’s interest.
The transaction will be done through a scheme of arrangement, for $5.70 a share in cash, reduced to the extent of any special dividend. The dividend is 15 cents per share (special dividend).
The cash consideration of $5.70 a share represents a significant premium of 43.2% to the last closing price of $3.98, and 51.4% to the three-month volume-weighted average price (VWAP), of $3.76.
The Citadel board believe the offer is compelling because:
- 43.2% premium to the closing price of Citadel shares on ASX of $3.98 on 11 September 2020
- 51.4% premium to the 3-month VWAP of Citadel shares of $3.76 per share
- 66.5% premium to the VWAP of Citadel shares since Wellbeing share issuance of $3.42 per share
Citadel Chairman, Lt-Gen (retired)Peter Leahy AC, said: “The scheme is an attractive transaction which provides an all-cash option for Citadel shareholders. The Citadel board has unanimously concluded that the scheme represents a compelling outcome for our shareholders, customers, suppliers and staff.”
The company has been on a strong trajectory since before COVID hit, trading as high as $9.20 in late 2018.
