Sand Grove Builds Stake in Idox Amidst £340M Takeover Battle

LONDON, UK – November 27, 2025 – In a move that adds a new layer of intrigue to an unfolding corporate acquisition, London-based Sand Grove Capital Management has revealed a significant increase in its holding in Idox plc, a specialist provider of public sector software. According to a regulatory filing, the investment firm now controls a total interest of 5.26% in Idox, crossing a key threshold for influence.

The disclosure is particularly significant as it comes just a month after Idox’s board unanimously recommended a £339.5 million all-cash takeover offer from Long Path Partners, an existing major shareholder. Sand Grove's recent dealings, which include purchasing shares and derivatives at 70 pence per unit, place its entry point just below the 71.5 pence per share offer on the table, sparking questions across the City about the fund's strategy and its view on the company's valuation.

This is not a simple stock purchase; it is a calculated move made in the full glare of the UK's strict takeover regulations, signaling that the final chapter of the Idox acquisition may not be written just yet.

Decoding the Position: Shares, Derivatives, and Strategy

A deeper look into the Form 8.3 filing reveals a sophisticated approach to building this stake. Sand Grove's 5.26% interest is not held entirely in common stock. The position is strategically split between 16.48 million directly owned shares, representing 3.57% of Idox, and an additional economic interest in 7.8 million shares (1.69%) held via cash-settled derivatives, specifically Contracts for Difference (CFDs).

This hybrid strategy is common among institutional investors for several reasons. Acquiring a position through CFDs allows a fund to gain economic exposure to a company's share price movements without the same capital outlay required for direct share purchases. It's a capital-efficient method for building influence or betting on a specific outcome, such as a higher bid emerging. For Sand Grove, it demonstrates a multi-faceted belief in the investment thesis, utilizing different financial instruments to maximize its position.

By combining direct ownership—which carries voting rights—with synthetic exposure through derivatives, funds can construct a powerful position that gives them both a voice in corporate matters and a leveraged financial stake in the outcome. This calculated accumulation suggests Sand Grove is not a passive investor but an active participant closely monitoring the unfolding events at Idox.

A Vote of Confidence or a Tactical Maneuver?

Sand Grove's increased stake raises a critical question: what does it see in Idox? On the surface, Idox plc is a model of a stable, modern software business. It is a dominant force in its niche, with over 90% of UK local authorities using its software for essential functions like planning, environmental health, and election management. The company boasts strong recurring revenues, which accounted for 62% of its £87.6 million total in fiscal year 2024, providing a predictable and defensible cash flow stream.

This stability and market leadership are precisely what attracted the current bidder, Long Path Partners. Already holding a 12% stake before its offer, Long Path argued that taking Idox private would allow it to focus on long-term product investment and strategic growth, free from the short-term pressures and reporting burdens of the public markets. The 71.5 pence offer represented a nearly 27% premium over the pre-offer share price, a valuation the Idox board found compelling.

Sand Grove's actions, however, can be interpreted in several ways. The most straightforward view is that the fund sees the 71.5 pence offer as a fair price and is simply accumulating shares to tender into the deal, locking in a small but relatively safe profit. However, building a stake of over 5% is a significant commitment for such a narrow arbitrage.

A more compelling theory is that Sand Grove believes Idox is worth more. "Seeing a fund like Sand Grove build a position above 5% during an active offer period is a clear signal," noted one anonymous market analyst. "They're either very happy with the current price or they believe there's more value to be unlocked, potentially through a revised offer. They are positioning themselves to be a key voice in the discussion."

By establishing this foothold, Sand Grove ensures it has a meaningful say in the acquisition's outcome. If it believes the offer undervalues Idox's long-term potential, particularly its push into cloud solutions and AI-driven analytics, it is now in a stronger position to agitate for a better price from Long Path or to attract a competing bidder.

The Takeover Code in Action

Sand Grove's public disclosure was not a voluntary announcement but a requirement under Rule 8.3 of the UK's Takeover Code. This regulation is the backbone of transparency in British mergers and acquisitions. It mandates that any party with an interest of 1% or more in a company under offer must publicly disclose their position and any subsequent dealings.

With Idox officially in an 'offer period' since the Long Path bid was announced, the market is subject to these heightened transparency rules. The code is designed to prevent the secret accumulation of shares that could unfairly influence the outcome of a takeover, ensuring a level playing field for all investors. Every purchase or sale by a significant stakeholder must be laid bare for the market to see, providing a real-time map of shifting shareholder sentiment.

This framework makes disclosures like Sand Grove's invaluable. They offer a transparent glimpse into the strategies of major financial players and allow other shareholders to make more informed decisions. It transforms the opaque world of institutional investing into a public drama, where every move is scrutinized for its potential impact on the company's future.

The Shifting Shareholder Landscape

Sand Grove does not operate in a vacuum. Its 5.26% stake makes it a significant, but not the sole, power broker in the Idox shareholder registry. The bidder, Long Path Partners, has been actively shoring up support, securing irrevocable undertakings and letters of intent that bring its total backing to over 29% of Idox's shares. This coalition includes commitments from long-term holders like Herald Investment Trust and Mercia Fund Management.

At the same time, the offer has prompted activity from others. Filings have shown that some investment managers, such as Rathbones, have been trimming their positions, perhaps choosing to cash in their gains following the bid announcement. This dynamic environment of buyers and sellers is typical of a takeover scenario, as different investors recalibrate their strategies based on their assessment of the deal's risk and reward.

With its new position, Sand Grove Capital has firmly placed itself among the key decision-makers. Its block of shares could prove crucial as Long Path seeks the required shareholder approval to finalize the acquisition. Whether Sand Grove ultimately supports the current deal, pushes for a higher price, or has another strategy in mind, its presence ensures that the path to taking Idox private will be watched with intense interest.