European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Event-Driven

A consortium formed by Scape Living PLC and iQSA Holdco Ltd entered into an agreement to acquire <a href="https://www.smartkarma.com/entities/gcp-student-living-plc" target="_blank" data-smartkarma-citation="entities:33771:1" rel="noopener">GCP Student Living (DIGS LN)</a> for approximately £969 mn on 16 July, i.e. 213p/share, cum dividend, via a scheme of arrangement.
The consortium is partially funded by equity from their respective primary shareholders, being funds managed by APG Asset Management N.V. and Blackstone. Scape Living and iQ have entered into a separation agreement pursuant to which, it is intended that all existing real estate assets owned by GCP will be transferred to Scape Living and iQ or their respective affiliates.
The transaction is subject to conditions including, approval from not less than 75% GCP Student Living plc shareholders, approval from court, approval from Competition and Markets Authority, approval from third parties.
The GCP Student Living plc directors intend to recommend unanimously that the scheme shareholders vote in favour of the scheme at the court meeting and the resolutions relating to the acquisition to be proposed at the GCP general meeting.
A shortfall of beds relative to student accommodation demand has seen increased interest from money managers in recent years. This business provides predictable income and recurring cash flows, although the alternative use of the assets as apartment or studios is very attractive.
Competitors of GCP, Scape Living and iQ are The Unite Group (UTG LN), the top listed player in the sector (with over 74,000 beds), Empiric Student Property (ESP LN), the Halls of Residence from the University of London and other independent players (Goodenough College, etc.).
At a 9.3% premium to pro forma EPRA NTAV of 195 p/share, this seems to me a knock-out bid. While it may be discussed whether this offer is opportunistic after a period of Covid &amp; Brexit related underperformance, the truth is that as the Board puts it, removes uncertainties. The consortium bets that full occupancy could be achieved soon (consensus does not forecasts it until 2023e).
There has been a high volume of shares traded since announcement, the market seems to bet on a sweetened bid or a competing offer (from Unite, Empire or others). 
GCP closed ay 214p/share on 212 July, a c. (0.5%) gross spread.
BUY on dips.

A consortium formed by Scape Living PLC and iQSA Holdco Ltd entered into an agreement to acquire GCP Student Living (DIGS LN) for approximately £969 mn on 16 July, i.e. 213p/share, cum dividend, via a scheme of arrangement.
The consortium is partially funded by equity from their respective primary shareholders, being funds managed by APG Asset Management N.V. and Blackstone. Scape Living and iQ have entered into a separation agreement pursuant to which, it is intended that all existing real estate assets owned by GCP will be transferred to Scape Living and iQ or their respective affiliates.
The transaction is subject to conditions including, approval from not less than 75% GCP Student Living plc shareholders, approval from court, approval from Competition and Markets Authority, approval from third parties.
The GCP Student Living plc directors intend to recommend unanimously that the scheme shareholders vote in favour of the scheme at the court meeting and the resolutions relating to the acquisition to be proposed at the GCP general meeting.
A shortfall of beds relative to student accommodation demand has seen increased interest from money managers in recent years. This business provides predictable income and recurring cash flows, although the alternative use of the assets as apartment or studios is very attractive.
Competitors of GCP, Scape Living and iQ are The Unite Group (UTG LN), the top listed player in the sector (with over 74,000 beds), Empiric Student Property (ESP LN), the Halls of Residence from the University of London and other independent players (Goodenough College, etc.).
At a 9.3% premium to pro forma EPRA NTAV of 195 p/share, this seems to me a knock-out bid. While it may be discussed whether this offer is opportunistic after a period of Covid &amp; Brexit related underperformance, the truth is that as the Board puts it, removes uncertainties. The consortium bets that full occupancy could be achieved soon (consensus does not forecasts it until 2023e).
There has been a high volume of shares traded since announcement, the market seems to bet on a sweetened bid or a competing offer (from Unite, Empire or others). 
GCP closed ay 214p/share on 212 July, a c. (0.5%) gross spread.
BUY on dips.

Scape Living & IQ / GCP Student Living: Knock-Out Offer