RBC Capital has pulled in its horns on JTC PLC (LSE:JTC), cutting the fund administrator from “buy” to “hold” after the company rejected a second takeover approach from Permira.
The Canadian bank argues that while private equity interest underlines the appeal of JTC’s model, the current share price already bakes in much of the bid premium.
Permira’s most recent offer, pitched at around £2 billion or 1,165p a share, valued JTC on roughly 19 times earnings before interest, tax, depreciation and amortisation.
That was rebuffed, and while Permira has until 26 September to return with a firm proposal, RBC does not expect “a meaningfully higher offer that JTC’s board may be minded to accept”.
The analysts have nudged their fair value estimate to 1,200p, factoring in a 25% chance of an improved bid, but caution that the shares now trade on about 22 times forward earnings, at the top of their historical range after a 45% rally in the past month.
The upcoming interim results on 16 September may offer more colour on a slowdown in institutional client wins.
Until then, investors tempted by the private equity noise may want to temper their expectations.
The shares were down 2.4% at 1,146p.