(Bloomberg)—Activist investor Legion Companions Asset Administration has constructed a place in DigitalBridge Group Inc. and believes the digital infrastructure firm ought to contemplate a sale if present efforts fail to ship worth to shareholders.
Legion Chief Funding Officer Chris Kiper mentioned he helps DigitalBridge’s management underneath Chief Government Officer Marc Ganzi and its strikes to rework the corporate over the previous two years. He estimates the corporate might triple in worth within the subsequent two years because it continues to boost new funds.
But when these efforts fail to spot the corporate’s shares re-rate inside the subsequent 12 to 18 months, the corporate ought to contemplate a sale, Kiper mentioned throughout a presentation on the Bloomberg Activism Discussion board Tuesday.
DigitalBridge, previously often known as Colony Capital, was based by investor Tom Barrack earlier than he left the corporate final yr following his arrest on federal prices alleging he unlawfully lobbied on behalf of the United Arab Emirates. He was later cleared of the fees.
In the meantime, DigitalBridge underneath Ganzi has been reworking from a diversified actual property funding belief to an alternate asset supervisor specializing in digital infrastructure, together with cell towers, knowledge facilities, fiber and small cells.
Legion, which has been an investor since 2020, counseled the corporate for its efforts to refresh the board, promote legacy property, purchase again shares and transition to a pure-play digital funding supervisor. Kiper famous that underneath Ganzi the corporate has persistently exceed its fee-earning property underneath administration targets, which ought to attain roughly $25 billion by the top of this yr and $55 billion by the top of 2025.
On the identical time, efforts to monetize its digital working section ought to ship proceeds that might equate to roughly 30% by 2023.
Legion estimates that, based mostly on a 2023 sum-of-its-parts evaluation, there’s probably an 80% upside on the place the shares are buying and selling, and that DigitalBridge might triple in worth by 2025 as new funds are launched.
DigitalBridge rose 2.9% to $12.88 at 1:16 p.m. in New York buying and selling Tuesday, giving the corporate a market worth of about $2.1 billion.
Kiper mentioned he’s a robust believer in Ganzi, noting that the CEO can also be extremely incentivized to drive up the worth of DigitalBridge’s shares. If the inventory hits $40 a share by mid-2024, Ganzi stands to get a $100 million payout, he famous.
If that may’t be achieved by present efforts, Kiper mentioned the corporate ought to contemplate a sale with a number of big-pocketed consumers already working within the house, together with the Blackstone Group Inc., KKR & Co., EQT AB, Brookfield Asset Administration Inc. and Macquarie Group Ltd.
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