These companies have been great performers on the junior market, but what do latest share deals tell us about prospects?
Team17 Group (LSE:TM17), which became a huge hit with AIM investors during the pandemic, has been backed by two of its directors after the video games studio announced a big move into “edutainment”.
Share purchases totalling £115,000 were made on Thursday by chief financial officer Mark Crawford and senior non-executive director Martin Hellawell at prices close to 800p - not far from the record 890p achieved in a year when the wider games market grew 20%.
Team17 capitalised on the favourable conditions through the launch of 10 new game titles last year, while its diverse back catalogue of titles, including the Worms franchise, also contributed to a sixth consecutive all-time high for pre-tax profits at £26.2 million.
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Now the company is broadening its reach through this month's blockbuster deal for StoryToys, which publishes educational entertainment apps - edutainment - and is a partner for many leading brands, including LEGO Group, Disney and Pixar.
At a price of up to $49 million (£35.4 million), the swoop for Dublin-based StoryToys is easily the company's biggest yet, and comes after last year's acquisitions of Yippee Entertainment and Golf With Your Friends for £1.4 million and £12 million respectively.
As well as the benefits from sharing their expertise, analysts at Berenberg are excited by the commercial opportunities that may come Team17's way through StoryToys' brand relationships, including Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Google-owner Alphabet (NASDAQ:GOOGL).
Berenberg raised its price target by 50p to 900p based on the immediately earnings-enhancing deal. Liberum has kept its target price at 760p until more is known about the financial details, but expects this and further M&A to drive upgrades during the current year and next.
The broker's caution also reflects uncertainty over how gamers will react to the ending of lockdown restrictions, which were a big factor in last year's 140% rally for shares up to mid-January. Fortunes have been choppier since then, falling from 890p to 660p in May.
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While exposure to the shares is not cheap on a forward price/earnings multiple in the mid 30s, fund manager Keith Ashworth-Lord remains a long-term fan as Team17 sits alongside Games Workshop (LSE:GAW), Jet2 (LSE:JET2) and Softcat (LSE:SCT) in his CFP SDL UK Buffettology fund.
In a recent interview with interactive investor, he said he liked how the business is not reliant on a handful of blockbuster titles, with about one-sixth of revenues coming from its own intellectual property and the remainder from third-party games.
Wakefield and Salford-based Team17 has been run for the past decade by Debbie Bestwick, who was one of the founders in 1990 before overseeing the 2011 management buy-out and listing on the stock market in May 2018 at a price of 165p a share. With the company now worth £1 billion, Bestwick was named entrepreneur of the year in December's AIM Awards.
She pointed out recently that deal-making is not central to the company's vision: “I’ve always said M&A in gaming is really easy if you play the short-term EBITDA growth strategy but long-term beneficial M&A takes being selective.
“Ultimately, we want to build partnerships with people who not only buy into our long-term values regarding growth, but also add real personal value to the wider business.”
AIM bosses turn seller
The boss of Gym Group (LSE:GYM) has raised almost £1 million by selling shares in the company for the first time since it listed on AIM in 2015. Richard Darwin, who stepped up from chief financial officer to become chief executive in 2018, still retains a substantial holding worth £2 million as well as a similar number of options under employee share schemes.
His move was made a week after the company secured £31.2 million in a placing of shares at 275p as Darwin looks to accelerate expansion to 40 new sites over the next 18 months.
Gym Group believes the Covid-hit commercial property market presents a perfect opportunity to increase the company's pipeline of sites on favourable terms. It has also been encouraged by the strength of demand after re-opening its current 183-strong gym network.
Shares closed on Friday at 280p, compared with 313p on 24 June and 211p in January.
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Another AIM boss offloading shares on Thursday was Jet2 founder and executive chairman Philip Meeson, who raised almost £24 million from the sale of two million shares at 1,188p. He remains the company's biggest shareholder with a holding of more than 21%.
The former British aerobatics champion has been involved with the business since 1983 and oversaw the launch of the Jet2.com low-cost airline brand in 2002. Last week, Meeson reported annual losses of £341.3 million but highlighted the airline and package holiday company's strong cash position amid continued support from lenders and shareholders.
He said: “With the vaccination progress being made, we are optimistic that summer 2022 will be a considerable improvement on both summer 2020 and summer 2021.” Shares closed the week at 1,223.5p, down from 1,897p prior to the pandemic but better than 472p in May 2020.
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