“If the proposed sales are successful, k1 intends to distribute proceeds back to shareholders and will effectively become a shell company,” says RHB analyst Goh Han Peng.
According to Goh, Guggenheim Capital has grown its assets under management significantly since k1 first invested in 2011. Its AUM has more than doubled around US$240 billion currently.
While the sale of stake in Guggenheim Capital is expected to fetch a handsome premium over its book value, Goh notes that k1 is already currently trading at a 70% premium over its book value of 48 cents per share.
“The market is thus pricing in $150 million of excess value over its book value,” he says. “We think this is an opportune time to take some money off the table given the uncertainty over the eventual price obtained.”
As at 11.22am, shares of k1 Ventures are trading 6 cents lower at 77.5 cents.
