The share price of Myhome Plc, the franchisor of domestic services including home cleaning, lawn mowing and oven cleaning has more than doubled since we participated in the placing earlier this year. Despite our belief that this is an excellent business with a very strong business model we were disappointed by the way they handled a recent issue of new shares to consortium of investors led by Nigel Wray and Stephen Helmsley, the management behind the success of Domino’s Pizza UK & Ire Plc.

The shares were trading around 55p when they announced that the consortium would be acquiring 10,000,000 shares at 40p per share representing 22% of the enlarged share capital. Furthermore the consortium would also be granted a further 7,500,000 warrants at the same level. Now, we have nothing against these guys getting involved as their extensive experience and success in the franchise business can only be good for the company but we were upset at the price entry level especially as the deal was not extended to existing shareholders.

We are of the opinion that the management were ‘seduced’ by the reputation of the Wray and Helmsley and therefore sold themselves too cheap. The company was growing very nicely before they came along so were hardly desperate for the cash injection.

With the shares currently trading at 72p, it appears that the management and shareholders may have been taken to the cleaners!!!!