The takeover deal bagging shareholders a 64% premium

M&A activity in the global small cap sector is heating up, making it a great time to consider an allocation to the asset class
Dan Peters

Spheria Asset Management

Sapiens International (NASDAQ: SPNS), a top holding in the Spheria Global Opportunities Fund, has just agreed to be acquired by private equity firm, Advent. 

The takeover offer comes at a significant 64% premium to its undisturbed share price.

Sapiens is a global provider of mission-critical software solutions to the insurance industry, deeply embedded in their clients’ operations with long-term contracts and high switching costs. 

Their entrenched position in a conservative sector has helped the company maintain strong cash flows and a robust net cash balance sheet – a trait shared by roughly half the holdings in our global small caps fund. 

It was less than 12 months ago, when my colleague Marcus Burns was interviewed on this platform about Sapiens (video embedded below). 

He astutely described it as a great global alternative to WiseTech. At the time it had a valuation that was sitting around 22x vs WiseTech which was on over 100x. 

We find many examples like this where global small caps offer far more compelling opportunities vs some of Australia's domestic high-flyers.

Identifying Sapiens

It was at a US investment conference in September 2022, where our team first came across the business. 

There was quickly a recognition amongst our team of its quality, and the disconnect between its fundamental value and listed market price. 

Since then, it has grown to become a top three holding in the Fund. 

It also happens to be the seventh portfolio company to be acquired in the past 6.5 years since the Fund’s inception.

Unloved public equities in the private equity crosshairs 

This transaction reflects a pattern we regularly see in our domestic strategies, where private capital targets undervalued, high-quality businesses overlooked by public markets. We expect to encounter more of these opportunities in the Global Opportunities Fund as we continue to apply our disciplined investment process globally.

Invest in a portfolio of global smaller companies with strong fundamentals

Click here to see the Spheria Global Opportunities Fund portfolio, performance, and other key information

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Dan Peters
Head of Research
Spheria Asset Management

Daniel has two decades of experience in the Australian equities market analysing companies across various sectors and across the market cap spectrum. Prior to joining Spheria he was at Schroders Investment Management for 13 years where he worked...

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