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Laxey vulture fund poised to swoop

Created:
28 February 2008
Written by:
Claer Barrett

Laxey, the activist investor which once famously tried to break up British Land, this week launched its Terra Catalyst fund on Aim, raising £117m. It is planning to acquire stakes in 6 to 8 companies in the crisis-hit commercial property sector which are trading at large discounts to net asset value (NAV).

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Chaired by property veteran Robert Ware, the fund will use Laxey's infamous agitator tactics to influence management and drive performance. Analysts believe this will herald a period of consolidation in the real estate sector. Its launch coincided with news that outsourcing group Mapeley could be taken private in a £250m deal by majority shareholder Fortress. The group's vulnerability stems from eye-wateringly high gearing and re-financing problems - a good indication of where Laxey might smell blood.

"It's open season," says Lehman analyst Mike Prew, who believes that companies with medium-term refinancing issues will be targeted. Even with 200 per cent gearing, FTSE giants like Hammerson and British Land are out of Terra Catalyst's reach but Minerva - suffering from its highly geared development exposure - looks tempting, as does Invesco Property Income Trust, which nearly breached its banking covenants last year. Capital & Regional is also a good cheap bet, but the 65 real estate companies on Aim offer the greatest consolidation potential, and commonly trade at larger discounts to NAV.

On Wednesday, Laxey increased its stake in Bulgarian Land Development to 14 per cent, but Mr Ware maintains that the Terra fund will be 70 per cent weighted to UK shares.

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