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Crosby Capital Partners (xx


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MarketCap: £ 143.3mn : 59p x 242.8mn shares ($268mn at $1.873)


CSB.L // Chart ... update



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Minesite has just published and article, trying to get to grips with CSB's strategy.

They have been making profitable moves, but the market is having trouble in classifying them


Trying To Understand The Strategy Of Crosby Capital Partners Ain’t Easy

By Jack Hammer




“Each deal is very, very bespoke”, says Simon Fry, chief executive of investment management group Crosby Capital Partners...


Crosby holds several key investments, chief among them a 24 per cent stake in Far East oil and gas operator IB Daiwa. Under a complex deal structure organised through Crosby’s Hong Kong parent company, Crosby also holds a direct interest in three key oil & gas exploration projects that that IB Daiwa subsidiary Lodore Resources is drilling. Another IB Daiwa subsidiary, Darcy Energy, holds proved, probable and possible gas reserves of 122.7 billion cubic feet. Crosby is a company with some real assets behind it. IB Daiwa aside, in the six months to June the value of Crosby’s listed securities portfolio rose from US$125million to US$219million. Clearly, at least for now, the company is getting something right. And the approach is nothing if not unique.


...most of the deals come out of the Singapore office, although the company does also maintain a presence in London and Hong Kong. But more fundamental than that is the philosophy behind the company’s view of the market. “Going in and fixing companies is what we do,” says Mr Fry...


There are plenty of deals on the horizon, the latest to emerge into the public domain being the offer for Marathon at A64¢ per share. But Mr Fry doesn’t want to get too hung up on Marathon. “It’s a huge resource, the twelfth largest uranium prospect in the world. But in relative terms it’s not a deal we want to focus overly on, although it’s got some good upside”. Intriguingly he adds that whether or not deals like this are ultimately successful, they do have other benefits. The company got to know a lot of people during its bid for Tethyan, and “the Tethyan process could lead to other deals”.


Marathon chart ... update


But the proof of the pudding is in the eating, and the market has yet to be convinced by Crosby. “It’s partly because the deals are sporadic”, says Mr Fry, “the market hasn’t had proof that there is a pipeline”. That’s lead to some headscratching as to just how Crosby is being valued at the moment. Taking Mr Fry’s view that Crosby’s peer group includes RAB and MacQuarie then Crosby’s earnings multiple makes it look distinctly undervalued.


On the other hand it trades on two times book value, which is a big premium to other deal-makers in a similar space like Cambrian. Either way the punters like the company, and trade it quite heavily given the limited free float. Perhaps it’s the unorthodoxy that appeals.


...MORE: http://www.minesite.com/storyFull5.php?storySeq=3786

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