Stan Beer
Wednesday, 30 July 2008 19:37
IT People -
Recruitment
Page 1 of 3
The share price of Australia's largest IT&T recruitment firm Peoplebank may be less than half its value 12 months ago but managing director Leon Lau claims the company is sound. Mr Lau blames the market's current fear of microcap stocks for Peoplebank's greatly diminished value, but some sources say the $100 million cash acquisition of Ambit in February is responsible.
As far as Mr Lau is concerned, the current share
price woes of Peoplebank are symptomatic of a general market downturn
which always tends to punish the smaller stocks more heavily.
"It's got nothing to do with the operations of Peoplebank or the
integration of Ambit. It's got all to do with the fear in financial
markets of microcaps," says Mr Lau.
"If you have a look at the whole recruitment sector including Clarius,
Talent 2, Rubicor and all the rest of them, you'll see that up until
recently, we fell less than anybody else."
When Peoplebank acquired Ambit for $100 million, $50 million was
provided by private equity group Navis Capital, which now has a
controlling stake in Peoplebank, a further 10 million came from
"sophisticated investors", and the rest was made up by $40 million of
borrowings from two banks, Commonwealth Bank and Westpac.
It is that $40 million in debt to fund an acquisition of another
recruiter when the market was near its peak that has raised some
concerns in the marketplace about Peoplebank. However, although
Peoplebank's market cap is now just over $53 million, Mr Lau dismisses
any concerns that may be held over the company's debt level. Please
read on to page 2
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