In a significant development last week, RBG Holdings faced a substantial setback when its second largest institutional shareholder, Dowgate Group, divested nearly all of its shares.
Dowgate Group, which previously maintained a 14.1% share in RBG Holdings, has now reduced its stake to under 3%. This decision comes amid continued challenges for the legal enterprise, which includes the renowned London law firms Rosenblatt and Memery Crystal, specialising in both contentious and non-contentious legal practices.
The impact of this withdrawal was starkly reflected in RBG’s share price, which dramatically dipped to 2p during the week, closing slightly higher at 2.13p on Friday. The founder, Ian Rosenblatt, remains the principal shareholder, holding 20.5% of the total share capital. Other significant shareholders include Premier Miton Investors with 15.7% and Kempler Capital Management, now holding 4.3%.
The downturn in RBG’s share value has been persistent; just last month, the value nearly halved to a little over 3p following an announcement of a 7% decrease in turnover and a reported loss of £5.7 million for the first half of the fiscal year. The company has further forecasted a full-year performance “significantly” below what the market had projected.
The share price, which once peaked at 148p in June 2021, has been in decline, starting 2023 at 64p before plummeting to 10.25p last December. This decrease followed warnings of poor results for 2023, which were eventually confirmed in May with a 14% revenue fall.
Efforts to restructure the company by streamlining focus onto core legal services, involving the sale of its litigation funding wing Lionfish and M&A advisory firm Convex Capital, have yet to reassure investors. In a December interview with Vox Markets, Laurence Hulse, Dowgate’s investment director, dubbed RBG a “deep value special situation”, emphasising potential high returns if strategic goals were met.
Mr Hulse pointed to past strategies, criticised as “diworseification”, and offered a future vision of focusing on the basic legal services. He stated that the firm now had “credible” leadership at its helm and praised the return of Mr Rosenblatt to the board, along with others in pivotal roles, as critical to the firm’s potential recovery.
Having characterised RBG as a “higher risk” investment segment for Dowgate, Mr Hulse highlighted the necessity for the firm to address its debts. He suggested that doing so, alongside a rise in market capitalisation, would gradually improve the business’s market perception.
RBG Holdings has refrained from commenting on Dowgate’s decision to reduce their shareholding.
RBG Holdings continues to navigate challenging circumstances, facing significant investor scepticism as it attempts to regain market confidence through restructuring and strategic realignment.
