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Renew - Enters the gas infrastructure market with acquisition

September 2014

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • RNWH
  • Price:
  • 300p
The shares went into orbit after Renew announced it had acquired Forefront for £14.8m - around 7x operating profit. To ensure bang for shareholders’ buck Renew is paying cash and funding the deal through cheap debt (a £12m term loan) rather than shares and the deal is immediately eps enhancing.Forefront is the largest provider of replacement gas mains (involving installation, repair, maintenance and self-delivered materials, recycling and restoration) in London and the South East with the work carried out through framework agreements. The business is underpinned by a 30 year gas mains replacement programme, which involves the replacement of iron gas mains pipes with polyurethane mains. Forefront also deals with emergency gas l ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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