As Trinity Exploration and Production plc falls to new lows on the London Stock Exchange (LSE) Alternative Investment Market (AIM), its largest investor is also its most optimistic.
A leading UK financial services company, Legal and General Group plc (L&G), acquired 25.43 per cent of Trinity plc in the days after the San Fernando-domiciled company completed its reverse takeover of Bayfield Energy, and relisted for trading as TRIN on AIM for �1.20 per share on February 14.
In a telephone interview from London, Matthew Evans, the L&G fund manager in charge of the investment into Trinity Plc, reaffirmed L&G's faith in Trinity management, and explained why the L&G became the T&T-based company's single largest shareholder. L&G is a major shareholder, defined by the LSE as owning at least three per cent, in several FTSE-100 companies that have already invested heavily in T&T, including BP, BG Group, BHP Billiton, Royal Dutch Shell and Centrica.
When Bayfield Energy was listed on the London Stock Exchange's junior market, L&G "spent some time assessing the oil and gas industry in T&T, and we felt it looked quite interesting. However, at the time we were looking at Bayfield, it wasn't quite appropriately set up for us to invest in that," Evans said.
However, he said, Bayfield's assets resembled the North Sea assets in that it was tasked with extracting oil and gas "from a fairly mature field."
He said L&G "felt there was a chance to replicate the North Sea model," but it was only when Trinity acquired Bayfield through a reverse takeover that "it felt like the right time to get involved."
Evans said: "The management team at Trinity brought some very good local management and operational capability on the ground in Trinidad, which we felt added quite a lot to the additional skills and criteria that we would look for in the top management; on the ground; operational expertise which we felt looked attractive."
Asked if his confidence is in not only the asset but also the management, Evans said "Yes, well, we knew Bayfield before, but had not invested in it, but we felt that Trinity's management and operational expertise would be spread across the company over a broad range of assets."
He said the Trinity management "gave us confidence that they could extract value from that portfolio." Trinity plc is successor to the Bruce Dingwall-started Trinity Exploration and Production Ltd which was previously 10 Degrees North.
The L&G fund manager said he was familiar with Dingwall as the founder of Venture Production, which successfully did in the North Se, what Bayfield was trying to do on Trinidad's east coast. Evans said he also met Trinity plc chief executive officer Monty Pemberton twice in London and was impressed with his track record at 10 Degress North and Trinity Exploration and Production Ltd.
"We knew the guys who were ex-Venture from the Trinity side. We knew Bruce Dingwall from his days at Venture Production and we felt he did a good job there," he said.
What sealed the deal was "actually, the local management team who gave us confidence that they had the skills to really extract the maximum value from assets that are based in Trinidad," he said.
Asked if he was concerned the stock was sliding and, at the time of the interview, trading below its opening price, Evans pointed outt it was trading even lower than the Business Guardian had quoted.
"The stock markets, at the moment, are pretty volatile," he said.
One of the issues that Trinity will have, he said, is that although it has a "good core of assets" they are "quite mature and will require a bit of work," but will incrementally boost the company's production.
"I think the stock market in London will take some time to fully appreciate the value that that can add to a business over time," he said.
Still, he said, "It's a good core asset base. We believe it's fundamentally undervalued."
He said L&G is prepared to wait for the first 12-18 months to let the company "really highlight" how good the assets are and by then, the shares will be "more fairly priced."
Asked if he thought the assets are undervalued, he said: "That's one of the biggest things for us. Really, the asset base is undervalued."
Trinity plc opened at �1.20 on February 14, hit its high of �1.34 on the same day, and low of �1.05 on April 29. Since March 14, when it reached a high of �1.30, it has been in steady decline.
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