- Holding in Block worth 35.2p a share at current prices and exchange rates
- Shareholders to vote on proposed scheme of arrangement next month
Aim-traded finance company ThinkSmart (TSL:31p) has released what could be its last results if shareholders approve a scheme of arrangement next month that will see them receive a cash distribution for the company’s holding in New York Stock Exchange-listed Block (US:SQ - $70), a $42bn market capitalisation fintech fund.
ThinkSmart paid out a dividend of £2.5mn (2.35p a share) in July 2022, after the half-year end, following a dividend of £3mn (2.8p) in December 2021. This week’s interim results revealed the company’s net asset value of £37mn included a £31.3mn valuation for the Block holding at 30 June 2022. At latest prices and exchange rates, the holding is currently worth £37.7mn, implying shareholders could receive a cash payment of 35.2p a share, or 13.5 per cent more than the company’s current share price, if the scheme is sanctioned. ThinkSmart’s remaining assets (cash and a legacy leasing business in wind-down) would then be transferred to the acquisition vehicle of ThinkSmart chairman Ned Montarello, and the shares delisted.
Since I first suggested buying the shares, at 14p, my April 2020 Alpha Research Report, ThinkSmart’s board has paid out total dividends of 8.5p a share to deliver a total return of 182 per cent on the holding. However, the gains were materially higher before ThinkSmart exchanged its minority holding in payment platform Clearpay for shares in Australian Stock Exchange listed Afterpay, which was in the process of being acquired by Block. The US giant has seen its stock price savaged in this year’s technology sector rout, shedding 57 per cent of its market capitalisation.
As I noted last month, I don’t think this is the best time to crystalise ThinkSmart’s holding of Block shares (‘ThinkSmart shareholders should think twice’, IC, 1 August 2022), although I recognise that shareholders can still recycle the cash distribution to make on-market purchases of Block shares to maintain their exposure, assuming the scheme is sanctioned. Hold.
Simon Thompson was named Journalist of the Year at the 2022 Small Cap Awards.
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