Bridgepoint (LSE: BPT) announced an IPO offer price of 350p a share on 21 July. Since then, the Bridgepoint share price climbed to 495p by market close on 26 July. That’s a 40% gain in just a few days, the kind of thing IPO dreams are made of. Eat your heart out, Aston Martin.
But is it going to be a flash in the pan, or the start of something big? And should I buy shares on the open market now? Before I can decide that, I need to take a look at what the company does.
Bridgepoint is a private equity group. It describes itself as “an international alternative asset fund management group focussing on the Middle Market.” That, it says, consists of “investing in market-leading businesses typically valued between €200 million and €1.5 billion.”
There are other segments in the firm’s portfolio, but that’s the core of it. And with €27bn in funds under management, it seems there are plenty of wealthy individuals who like Bridgepoint’s approach. It’s clearly starting public life as a successful company, rather than as a speculative chancer coming to market in need of cash. And that’s presumably the driver behind the early Bridgepoint share price spike.
Why might I buy?
As a small private investor, what might be the attraction for me? Well, it’s sort of a way to gain exposure to private equity markets. That doesn’t mean I’d get to invest in such assets directly, but that’s fine. I’d never hand over my money to a fund manager to invest for me anyway. But buying Bridgepoint shares would get me a cut of the profits the company makes in fees from investing rich people’s cash. And I do like that.
In fact, I’m keen on the idea of investing in asset managers generally. And I’ve come close to buying Man Group shares on more than one occasion. The Man share price has had an erratic five years, though. But the company has been paying decent dividends.
Bridgepoint share price volatility?
Might the Bridgepoint share price be volatile too? Well, its underlying investments, in private rather than publicly-quoted companies, could offer an advantage. Those companies don’t have hordes of short-term investors hanging on their daily share price movements. They don’t even have share prices. So Bridgepoint should be under less pressure to trade, from investing institutions that look no further than the next quarter’s figures.
Short-term volatility wouldn’t put me off, mind. As billionaire investor Warren Buffett suggests, I wouldn’t consider buying Bridgepoint shares unless I was prepared to hold them for at least 10 years.
So I do see the attractions of Bridgepoint. But whenever I want to put some money into an asset manager, I’ve always gone for an investment trust. Doing that gets me a direct share in the underlying assets. I don’t think I’ll move away from that strategy, but I will be watching where the Bridgepoint share price goes next.
