One51 has certainly had its ups and downs over the years. It is only a few years since shareholders were looking at writing off their investment entirely, given the losses at the company. After a change in leadership and significant restructuring which refocused the company, One51 looks set to now deliver for shareholders after all this time.

For longer-term shareholders, particularly the Irish co-ops, the flotation of One51 creates the opportunity to exit a business that has caused many headaches over the period.

When One51 was first spun out of IAWS, Irish co-ops received a combined 36% shareholding in the business – effectively for free.

Over the years, the Irish co-ops invested €77m at prices that ranged from €3.37 to €5 per share to increase their shareholding to 52% of the business. At its peak, this shareholding was valued at €383m. Following the collapse in the value of One51, the co-ops’ shareholding fell 80% in value to less than €60m.

Walsh gets on board

The co-ops have sat by patiently since Alan Walsh came in as CEO in 2011 to turnaround the company, which has transformed into a business with a market capitalisation of almost €300m based on today’s grey market share price of €1.85-€1.90. This means the co-ops’ 25% shareholding today is valued at €75m – still less than the original investment.

However, the recent deal struck by financier Dermot Desmond’s IIU and related parties to sell 26% shareholding in One51 to a Canadian asset management firm for a price rumoured to be in the region of €2.50 per share raised eyebrows around co-op board tables. If co-ops could get out at €2.50, they would net €100m, which would see them get their original investment back along with a €20m return.

With IIU out of the picture, this allows One51 to progress its plans to restructure its shareholding and press ahead with its original plans to float on the stock market. With half-year results due next week, it is likely we will see more detail around One51 stock market listing plans.

For shareholders, the key question is around the market valuation of the share price of One51. According to a detailed note released by Goodbody this week, One51 shares are currently trading at 12.7 times earnings. According to Goodbody’s analysis, One51 shares are valued lowered than global industry peers, which are typically in the range 16 to 21 times earnings.

As One51 has a relatively high debt compared to its peers, once this is factored in, it is still valued at less than its peers. This indicates that One51 is reasonably valued at a share price of €1.90 but there may be some upside potential given where it sits relative to its peers. This would suggest that if One51 continues to perform to plan and deliver, the current share price may see a 30% uplift.

Of course, this all hinges on the corporate restructuring of One51, which will see the Canadians swap their minority shareholding in IPL for new shares issued in One51.

The stock market will welcome a more streamlined structure and shareholders will welcome the increased liquidity a stock market flotation will provide. It would also allow One51 access to capital in the future to fund further growth.

Decision time

Having shown patience over the last decade, Irish co-ops may soon be in the position to unwind their investment in One51. However, co-op boards will have a decision to make on whether to sell out for a breakeven price, which would return the capital for use in core businesses, or stay invested for the longer term with a view to asset value growth or dividend returns.