If it were a wagon train, Billing Services Group would have formed a circle and broken out the Winchester rifles some time ago. The company, which is US-based and ranks as one of the leading payment services businesses for telecoms companies worldwide, came to AIM in June last year in order to aid its European expansion plans.

This year it has been in the eye of a near-constant storm. It received and rejected a management buy-out in the spring and has since been through a management upheaval, a profits warning and a share price collapse. The current 27.5p share price is less than half the year’s high.

But in recent weeks a slew of US investors, hedge funds among them, have been picking up stock in BSG. The latest word is that Wall Street financier Jim Mellon has joined the fray.

All of this has coincided with the departure of a chief executive who was only appointed in the spring following the failed MBO, and the appointment of a successor, Randall Brouckman, who will now combine the chief executive and chief operating officer roles. Somehow, I cannot see BSG surviving as an independent entity for very much longer.
The business is now capitalised at �76 million. That is �31 million less than it paid for a German acquisition shortly after joining AIM. It has since bought the UK business, United Clearing. In total, acquisitions over the past year or so amount to more than �130 million. However, there is the little matter of �137 million of borrowings, so the total enterprise value is �218 million. Even so, on a sum-of-the-parts analysis that is a woeful undervaluation.

In July, the company said that delays in tying up new contracts, combined with slower than expected growth in credit card processing plus a rise in operating expenses, meant the company would suffer something of a slowdown in the second half. As a result, earnings before interest and depreciation (EBITDA) would emerge at between �24 million and �25 million. With a full year of the last two acquisitions, the figure would probably be �1 million or more higher. In other words, the company’s enterprise value, even in a dull year, is no more than eight-and-a-half times EBITDA. Given the opportunity to borrow large amounts of money still at single-digit interest rates, a private equity house or any other bidder would have plenty of scope for making a takeover bid pay at this level.

The business is fundamentally sound. The US business centres around a wireline clearing and settlement operation that put on 43 new customers in the first half of the year. In Europe, BSG settles mobile roaming charges. Those will doubtless come under pressure as the European Commission gets to grips with an industry renowned for its exuberant charging. But there is plenty of growth overall – as a 27 per cent rise in first half gross profits indicates.

BSG may be an unfamiliar counter, but it certainly warrants a speculative buy. With some big guns lining up on the share register, the next few months could provide a fun ride.