Stake Shifts at De La Rue Plc: A Strategic Crossroads?

In the world of corporate governance, small shifts in shareholdings can send ripples through markets. De La Rue Plc, a century-old British firm specializing in secure currency printing and document solutions, has drawn attention recently with two Form 8.3 filings revealing subtle changes in stakeholdings by Rathbones Group Plc and Jefferies International Limited. While neither move crosses the 5% threshold requiring a formal takeover bid, the adjustments underscore evolving investor sentiment toward a company navigating a rapidly changing industry.

The Numbers Behind the Moves

On April 24, Rathbones Group Plc disclosed a sale of 62,125 shares in De La Rue, reducing its stake to 7,383,099 shares—or 3.75% of the company’s voting rights. This marks a minor trimming of its position, likely reflecting portfolio rebalancing rather than a full exit. Meanwhile, Jefferies International Limited reported purchasing 7,557 shares, bringing its direct holdings to 3,684,925 shares (1.876% of voting rights). However, Jefferies also disclosed a short position of 3,741,640 shares (1.905%) via cash-settled derivatives, a move that signals cautiousness about the stock’s near-term prospects.

What the Filings Reveal

1. Rathbones’ Prudent Adjustment: The sale by Rathbones, a long-term investor, suggests a tactical shift rather than a loss of confidence. At 3.75%, its stake remains significant but avoids crossing the 5% threshold that would trigger mandatory disclosure of further activity. This may indicate a desire to avoid future scrutiny or reduce exposure ahead of potential volatility.

2. Jefferies’ Dual Play: Jefferies’ simultaneous purchase of shares and establishment of a short position via derivatives is less common. The long position could reflect a belief in the company’s long-term value, while the short exposure might hedge against near-term risks such as declining demand for physical currency—a key concern as digital payment systems expand.

Industry Context: A Declining Market?

De La Rue operates in an industry facing existential threats. The global demand for banknotes is shrinking as digital transactions rise, and geopolitical shifts, such as the U.S. dollar’s dominance, reduce the need for custom currency printing. shows a stock trading near its 52-week low, reflecting these pressures.

In 2023, De La Rue reported a 14% drop in revenue to £377 million, with a £13 million pre-tax loss, as legacy businesses like currency printing declined. The company has been pivoting toward high-margin areas like secure document solutions and blockchain-based identity verification. However, these efforts have yet to stabilize earnings, leaving investors uncertain about the transition’s success.

Why Investors Should Pay Attention

While the stake adjustments are small, they highlight two divergent views:
- Rathbones’ sale may reflect skepticism about De La Rue’s ability to execute its strategic shift.
- Jefferies’ mixed stance suggests a bet that the stock’s valuation (currently trading at 0.5x book value) is too low to ignore, even if near-term challenges persist.

The filings also underscore the regulatory scrutiny of minority shareholders under the Takeover Code. Neither Rathbones nor Jefferies holds enough to influence governance, but their disclosures serve as a reminder that institutional investors are actively monitoring the stock.

Conclusion: A Stock at a Crossroads

De La Rue’s future hinges on its ability to transform into a technology-driven security solutions firm. The recent stake adjustments by Rathbones and Jefferies reflect this uncertainty. While Rathbones’ sale hints at caution, Jefferies’ dual position—buying shares while shorting via derivatives—suggests a belief in value but not yet in sustained growth.

Investors should note that De La Rue’s stock has fallen 25% over the past year, even as its peers like G+D Currency Technology (a division of Giesecke+Devrient) and Crane Currency have faced similar pressures. With the company’s valuation near historic lows and its balance sheet relatively strong (net cash of £24 million as of 2023), the stock may offer a speculative opportunity for those betting on a successful turnaround. However, the risks remain high: if digital payment adoption accelerates further, or if De La Rue’s new initiatives fail to gain traction, the current shareholders’ adjustments could look prescient indeed.

For now, the market’s verdict is split—but the next Form 8.3 filing could tip the scales.