Troubled insurer and boiler repair group Homeserve has jumped nearly 8% on renewed speculation of possible private equity interest.
The company is still awaiting the outcome of an FSA investigation into mis-selling, and nearly a year ago it was forced to deny speculation it was in talks with possible bidders. Joe Brent at Liberum Capital said:
Homeserve had a volatile trading session [on Wednesday], increasing 10% in the morning, and falling 6% over the whole day. The press speculate that Homeserve may be in the private equity cross-hairs. The shares are tightly held, and often prone to bouts of volatility. There are some genuine reasons for being more positive. The results two weeks ago confirmed numbers and gave some re-assurance that the new model can deliver stability and perhaps growth from a re-based level in the UK. We also sense that Homeserve is approaching an end game with the [regulator], which is most likely to be 'positive'. We do believe that the combination of these two things make Homeserve more attractive to a private equity buyer, who would value the relative resilience of the UK and the growth of overseas. We are genuinely unsure though, whether cost-savings, customer growth and retention will all come in at the right level to deliver consensus.
Homeserve is currently 18.8p higher at 264.4p.
