Smart Metering (LON: SMS) share price surged by more than 40% on Thursday, making it the best-performing company in the FTSE 250 index. The stock jumped to a high of 975p, much higher than its Wednesday’s closing price of 675p. This surge has moved by more than 70% from its lowest level this year.
Smart Metering Systems surged after KKR confirmed that it was acquiring the company at a high premium. This is another notable news since it confirms that there is strong demand for small-cap British companies.
On Wednesday, I wrote that Ten Entertainment, which runs bowling alleys was acquired with a 33% premium. A few weeks ago, Mars acquired Hotel Chocolat, a chocolate company in a 170% premium.
This means that many investors, especially American ones, believe that British companies are quite undervalued. They are also taking advantage of the relatively weak British pound, which has fallen by over 11% from its pandemic high and by 27% from its 2014 high.
KKR’s acquisition of Smart Metering Systems is another bet of the energy sector. It operates EV charging infrastructure, household metering solutions, and other energy solutions. The most recent results revealed that the company’s revenue jumped by 26% in the first half of the year to 79 million pounds.
Its underlying profit before tax rose by 9% to 11.2 million pounds. Its strong results were supported by higher rental per smart meter and its increased focus on single fuel and industrial smart meter installations. In a statement, the company’s CEO said:
“Our index-linked revenues provide a natural hedge against increased interest rates in the short term whilst significantly benefitting long-term cash flows.”
KKR is one of the biggest private equity companies in the world with over $497 billion in assets under management. Most of its assets are in private credit followed by private equity, infrastructure, and real estate. In addition to Smart Meter, the company owns other UK companies like A-Gas, The Citation Group, ERM, and Travelopia.
This article first appeared on Invezz.com
