Stock exchange: RBG share price slumped to just 2p
Struggling listed legal business RBG Holdings suffered another blow last week when its second biggest institutional shareholders sold most of its stake.
Dowgate Group, which had held 14.1% of the company’s shares, reduced that to a shade under 3%.
RBG – which owns London law firm Rosenblatt and Memery Crystal, its contentious and non-contentious practices respectively – saw its share price shrink to just 2p during last week, closing on Friday at 2.13p.
Founder Ian Rosenblatt remains the biggest shareholder, with 20.5% of the issued share capital, followed by Premier Miton Investors (15.7%). With Dowgate now off the list, next comes Kempler Capital Management (4.3%).
RBG’s share price nearly halved last month to a little over 3p after it announced another 7% fall in turnover and a £5.7m loss for the first half of the year. RBG also predicted that the full-year results would be “significantly” below market expectations.
The price hit a high of 148p in June 2021 but has been falling ever since. It started 2023 on 64p and then dived to 10.25p last December after it warned about upcoming poor results for 2023, which were finally unveiled in May as a 14% fall in revenue.
Restructuring the business to focus on the core legal services operation, which meant selling off its litigation funding business Lionfish and M&A advisory firm Convex Capital, do not appear to have convinced investors yet.
In an interview last December on Vox Markets, a website for investors, Dowgate investment director Laurence Hulse described RBG as a “deep value special situation where if we’re right and if the management do what they think they can, it has the potential to be a real high return investment”.
What had happened in the past had depressed the valuation of the group to a market capitalisation of about £15m (at the time, the share price was 16p), but Mr Hulse said the core law firm (Rosenblatt) was “really high quality”.
He dubbed what had happened in recent years as “diworseification”, saying: “Our thesis is stick to the knitting, back to basics, do what you’re good at and do lots of it.”
Mr Hulse said RBG now had “credible people at the helm”. He welcomed the then recent return of Mr Rosenblatt to the board, describing him as “a bit of a force of nature”, and praised chief executive Jon Divers – “a safe pair of hands” – and financial director Kevin McNair, who was a “proper recovery/restructuring specialist, which is what this business needs”.
Mr Hulse said RBG needed to start paying down its debt and that, as this happened and the market capitalisation rose again, “perception of the business will evolve and improve”.
It was, he added, at the “higher risk” end of Dowgate’s investments.
RBG had no comment on Dowgate’s decision to reduce its shareholding.
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