UK’s Blue Prism becomes the latest target of US Private Equity. And One Activist Investor Is Unimpressed – NBC Connecticut

• Blue Prism shares rose Wednesday after it confirmed it had entered into talks with TPG Capital and Vista Equity Partners.
• Shareholder Coast Capital believes that Blue Prism is currently undervalued and that it would be a mistake to agree to a takeover at its share price.

Robotics Company Blue prism has become the latest in a string of British companies to attract the attention of US private equity firms, but a leading shareholder has urged the company not to sell.

Blue Prism shares rose Wednesday after it confirmed it had entered into talks with TPG Capital and Vista Equity Partners. However, it stressed that “there is no assurance that an offer will be made, nor the terms under which an offer will be made.”

It comes after supermarket chain Morrisons, infrastructure group John Laing and aerospace company Cobham have all been subject to transatlantic private equity approaches in recent months.

Blue Prism, one of the largest technology companies in the London Stock Exchange AIM market, uses robotic process automation (RPA) software to hire digital staff to perform back-office tasks for companies.

However, in a letter sent to Blue Prism’s management team on Tuesday, seen by CNBC shareholder Coast Capital, a notable activist investor behind opposition to the sale of its US businesses by FirstGroup, expressed concern about the company’s valuation.

Coast Capital believes that Blue Prism is currently undervalued and that it would be a mistake to agree to a takeover at its share price.

“As you well know, Blue Prism PLC’s business value is currently estimated to be approximately three times future revenue – an 80% to 90% discount for the company’s competitors including UiPath, Appian, WorkFusion, Automation Anywhere, etc. ” letter from Coast Capital said.

“If a buyer paid a 100% premium, the share price would still be significantly below its NAV, and well below the level at which the shares traded in January 2021.”

Coast Capital CEO James Rasteh said Blue Prism faced a number of issues, such as product gaps in its portfolio, its position on the London junior Stock Exchange and its geographic distance from many key clients, but these could be overcome. He said Coast had worked with industry experts to develop an operational improvement plan to drive revenue growth and increase Blue Prism’s share value.

“In addition, we note that Blue Prism PLC’s team (including management and governance) has built and maintained the world’s premier unmanaged automation software product, with an extremely valuable customer base of more than 2,000 large-scale enterprises,” said Rasteh.

“Even in its current worst period, the company enjoys an enviable reputation as a best-in-class performer, and as a result continues to be a leader in its fast-growing and highly profitable industry. Now is not the time to throw in the towel! “

Blue Prism declined to comment. TPG Capital and Vista Equity Partners were not immediately available for comment when approached by CNBC.

‘Reverse activism’

Where Coast Capital Public urging management changes at FirstGroup, Rasteh told CNBC in an email on Thursday that the company’s involvement with Blue Prism was “the reverse of activism,” claiming it planned to work with management to implement the required implement operational changes.

Coast Capital has a stake of just under 3% in Blue Prism. Jupiter Fund Management, which declined to comment, is the largest shareholder with a 7.49% stake, according to data from Refinitiv Eikon.

Shares of the company rose a whopping 39% on Wednesday, but continue to fall about 30% this year.

“The CEO, Jason Kingdon, is clearly a visionary in the high-tech industry in the UK and has not been given enough time to influence the HR changes and operational improvements that can and will transform Blue Prism,” said Rasteh.

Kingdon was an early investor in Blue Prism and became chairman and CEO in April 2020.