CFG financial results plus increased Chinese stake

[caseball]

Looks like the Chinese partner paid 70 million quid for 1% of the company. I don't know much about business but that seems to set a putative value for CFG of 7 billion. Is that possible?

 

[taleofbluehalves]

Looks like the Chinese partner paid 70 million quid for 1% of the company. I don't know much about business but that seems to set a putative value for CFG of 7 billion. Is that possible?

This is what it means to be City...

 

[caseball]

Is it realistic to value the company on the basis of the transfer of 1% of the shares? Be nice if it is. For the sheik like.

 

[aguero93:20]

Is it realistic to value the company on the basis of the transfer of 1% of the shares? Be nice if it is. For the sheik like.

No, use the full purchase by them.

 

[Prestwich_Blue]

Looks like the Chinese partner paid 70 million quid for 1% of the company. I don't know much about business but that seems to set a putative value for CFG of 7 billion. Is that possible?

No. They will have set a price that reflects the overall cost of a 14% stake in the group.

On a simple basis they've paid about £335m in total for 14% of the group, which would valued it at around £2.4bn compared to the £2bn it was value at when they bought the 13% stake.

 

[TCIB]

The last sentence sums it up for me "moving in the right direction" all aspects of the club are thriving and kicking on, it is a lovely feeling to have. There are no nasty surprises or bumps un our road ahead. Players are happy, staff are, fans are happy and even the money men are nodding happily.

This is what utd had to a lesser extent in their pomp and it really twisted a knife in my gut. Everything was on the up for them and i thought i would never see the day we were any good let alone better that the current (at the time) best team in the country.

I get the idea our momentum in all areas is not even close to being maxed out either, would that be correct @Prestwich_Blue ? For example i understand utd's commercial opportunities are not as large as they once were, only so many noodle sponsors you can have etc.

 

[caseball]

Thanks for the straightforward replies. It makes sense that an overall investment would have to be taken into account to arrive at an estimated value.

 

[Thx_to_Neil_Young]

Maybe I'm being a little naive, but wouldn't they have only paid approx £24m for a 1% stake if CFG was valued at £2.4bn?

 

[Norbiton]

Is there a danger that UEFA could look at this and rule that we're manipulating the figures to show City as making a profit while the rest of the City Group is burdened with the losses?

 

[Prestwich_Blue]

I look to you to make sense of this stuff, but I'm struggling with this, you posted on Twitter...

"Because their original 13% stake cost £260m, meaning the overall 14% stake cost them £333m in total."

but isn't this comparing apples and oranges? Their overall cost is undoubtedly £333m in total, but I'm not sure that tells us very much about the value of CFG now, their latest purchase of 1% cost them £73 million! That is a huge disparity, £260m for 13% last year and £73m for 1% now. You're having this conversation with Ray Bubbles on Twitter using a race horse analogy, so I'll not copy it here, but so far I'm with Ray on this, re-iterating as you do that CFG is not worth £7.3 billion is, I believe, undoubtedly correct, but this fact alone does not shed any light on the enormous difference in price between 13% then and 1% now.

I come in peace with this one, I'm looking for enlightenment.

I'll try. I've checked all the relevant documentation and the key statement is actually in the previous year's accounts, the ones to May 2016. In the note about Share Capital it says that after the year end CMC paid £3.96 a share for 18.43m shares, which is £73m. That was July 2016. After that transaction they were reported as holding about 14% of the shares. They'd already paid £3.54 a share for 75m shares in December 2015 to give them a reported 13%. So actually this is old news.

Ignore the fact they paid £265m for 13% and £72m for 1% as we simply don't know how the deal was worked out. Some of the money from the original deal was for shares bought from ADUG I believe, which would have gone through ADUG's accounts rather than CFG's. The key figure is the price per share. which rose from £3.54 to £3.96 in just over 7 months. These share prices are consistent with a group valuation of £2.1-2.2bn and that figure is itself consistent with a supposedly reliable valuation model.