Strategic developments highlight valuation anomaly

eEnergy has announced a strategic investment from Luceco plc, whereby Luceco will invest £1.75m via a subscription for new ordinary shares at 5p per share, a 25% premium to yesterday’s closing price. Luceco is a significant supply partner to eEnergy’s eLight business (part of its Energy Services division). The investment looks strategically sensible, strengthening this longstanding relationship, as well as eEnergy’s balance sheet. Additionally, the Board is exploring the potential disposal of the Energy Management division.

After receiving a number of indicative cash offers, which valued the division at >£30m, the Board has entered into a period of exclusivity with one of the interested parties. Irrespective of the outcome of this process, we feel that these developments shine a light on the underlying value of the Group, which, in our view, is not reflected in a current market cap of just £15m.