Key points:
- Vela Technologies’ share price surged 11.1% on a shift in strategy.
- The company may pursue a bigger transaction to unlock shareholder value.
- Investors cheered the announcement, as evidenced by the rally.
The Vela Technologies PLC (LON: VELA) share price surged 11.1% after the company announced that it had shifted its investment strategy to pursue much larger acquisitions through reverse takeovers, the acquisition of a division of a listed company, and substantial investment in a trading business by Vela.
The technology investment company said that the change in strategy was due to the appointment of Antony Laiker to its board, who is also a significant shareholder in Vela. The current strategy was initially outlined in the company’s financial results for the 2019 financial year on 26 September 2019.
Also read: The Best UK Tech Stocks To Buy Right Now.
Vela Technologies adopted a new investment strategy in July 2020 after failing to implement the initial strategy due to the COVID-19 lockdowns. The company went ahead to expand its investment portfolio, which did not result in a rally in its share price so that its market capitalization would reflect its net asset value.
The company’s current share price values it at a mere £4.71 million, which is not a true reflection of its net asset value; hence, the decision to revert to the previous strategy where Vela is now seeking to participate in a larger transaction that would combine its assets with those of another company.
Investors cheered today’s announcement, which could unlock significant value for Vela shareholders that reflects the actual value of the company’s thirteen active investments, ten publicly listed companies and two private companies. One is a royalty agreement with St George’s Street Capital (SGSC).
Vela Technologies confirmed that it has been approached by several parties and has engaged in informal discussions with those parties but is yet to identify a potential transaction under the new criteria. If such a transaction is identified, Vela has promised to engage its nominated advisers before bringing the same to its shareholders.
The current value of Vela’s investment portfolio was £5.97 million as of 30 June 2022, which is much higher than its current market value.
*This is not investment advice.
Vela Technologies’ share price.
The Vela Technologies share price rallied 11.11% to trade at 0.0250p, rising from Wednesday’s closing price of 0.0225p.