Currency in GBP
Last close As at 03/02/2023
GBP3.95
▲ 43.20 (12.28%)
Market capitalisation
GBP538m
Research: Financials
Molten Ventures continues to deliver strong returns, fully meeting its guidance for FY22, though the current environment is clearly more challenging than the buoyant conditions seen in 2021. The group is in the process of raising its growth fund and is also looking to extend its debt facilities to ensure that it can take advantage of new investment opportunities in FY23. Underlying portfolio performance remains strong (averaging above 65% y-o-y revenue growth for the core portfolio). NAV/share is expected to be not less than 929p, up 25% y-o-y, delivering a five-year CAGR FY17–FY22 of 22%. However, FY22 was a year of two halves, with NAV/share up 19% in H122 and 5% in H222. At the latest closing price of 704p (28 April), the shares are trading on 0.76x FY22 NAV. Gross portfolio value (GPV) is expected to be not less than £1,529m, up 55% y-o-y, implying a gross portfolio return of 37% (versus guidance of 35%) post a net investment of £185m for the year. Building third-party FUM to increase fee income remains a key priority for FY23, with management confirming that plans for the growth fund remain on track. A 22% five-year NAV/share CAGR coupled with a material discount to NAV should make Molten Ventures particularly attractive to long-term investors.
Molten Ventures |
A compelling story at an attractive discount |
FY22 trading update |
Listed venture capital |
29 April 2022 |
Share price performance Business description
Analysts
Molten Ventures is a research client of Edison Investment Research Limited |
Molten Ventures continues to deliver strong returns, fully meeting its guidance for FY22, though the current environment is clearly more challenging than the buoyant conditions seen in 2021. The group is in the process of raising its growth fund and is also looking to extend its debt facilities to ensure that it can take advantage of new investment opportunities in FY23. Underlying portfolio performance remains strong (averaging above 65% y-o-y revenue growth for the core portfolio). NAV/share is expected to be not less than 929p, up 25% y-o-y, delivering a five-year CAGR FY17–FY22 of 22%. However, FY22 was a year of two halves, with NAV/share up 19% in H122 and 5% in H222. At the latest closing price of 704p (28 April), the shares are trading on 0.76x FY22 NAV. Gross portfolio value (GPV) is expected to be not less than £1,529m, up 55% y-o-y, implying a gross portfolio return of 37% (versus guidance of 35%) post a net investment of £185m for the year. Building third-party FUM to increase fee income remains a key priority for FY23, with management confirming that plans for the growth fund remain on track. A 22% five-year NAV/share CAGR coupled with a material discount to NAV should make Molten Ventures particularly attractive to long-term investors.
Period |
Plc cash* |
Gross portfolio value (£m) |
NAV |
NAV/share |
P/NAV |
09/20 |
62.1 |
702.4 |
714.7 |
600 |
1.17 |
03/21 |
160.7 |
983.8 |
1033.1 |
743 |
0.95 |
09/21 |
156.2 |
1350.2 |
1357.4 |
887 |
0.79 |
03//22** |
78 |
1529 |
1421 |
929 |
0.76 |
Note: *Includes restricted cash but not funds held on behalf of EIS/VCT investors. **Unaudited figures - audited FY22 results due on 13 June 2022.
At the year end, Molten had available cash resources of £113m, including group balance sheet cash of £78m and £35m of undrawn debt facilities, implying net cash of £53m. Management is looking to expand its debt facilities in FY23.
Recognising the more challenging funding environment (and hence opportunity) for early-stage companies, management announced a further £75m has been committed to the fund of funds programme (in addition to the £75m approved to date) to be deployed over the next five years.
FY22 saw portfolio realisations through trade sales, IPOs and special purpose acquisition companies (SPACs), with cash proceeds of £126m (13% of GPV versus Molten’s target of 10–15% through the cycle) coming from the sale of Trustpilot and UiPath shares, as well as from exits of Bright Computing, SportPursuit, Premfina and Conversocial. GPV growth (up 55% y-o-y) came from Ledger, CoachHub, Thought Machine and Aiven, more than offsetting the fall in value of Molten’s public company shareholdings at the year end.
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Research: Real Estate
Coinciding with its FY21 AGM, Primary Health Properties (PHP) has provided a trading update for the quarter ending 31 March 2022 (Q122). During the period it made good progress in converting its investment pipeline, which continues to grow, while organic rental growth accelerated, in part driven by the inflationary environment. With ample liquidity and 97% of debt fixed/hedged, it is well placed for further growth.
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