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Research: Investment Companies
Molten Ventures has recently completed the exits from Perkbox, Endomag and Graphcore. This translates into more than £70m realisation proceeds, which means Molten is on track to reach the £100m that management expects for FY25. As a result, Molten has announced a £10m buyback programme (starting on 26 July), in line with its recently updated capital allocation policy of earmarking at least 10% of realisation proceeds for share repurchases. Molten has also agreed a new £180m debt facility that replaces the previous £150m facility maturing in September 2024.
Molten Ventures |
Making progress on its realisation agenda |
Company announcements |
Listed venture capital |
13 November 2023 |
Share price performance
Business description
Analysts
Molten Ventures is a research client of Edison Investment Research Limited |
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Molten Ventures has recently completed the exits from Perkbox, Endomag and Graphcore. This translates into more than £70m realisation proceeds, which means Molten is on track to reach the £100m that management expects for FY25. As a result, Molten has announced a £10m buyback programme (starting on 26 July), in line with its recently updated capital allocation policy of earmarking at least 10% of realisation proceeds for share repurchases. Molten has also agreed a new £180m debt facility that replaces the previous £150m facility maturing in September 2024.
Period |
Plc cash* |
Gross portfolio |
NAV |
NAV/share |
Discount/premium |
09/22 |
28.5 |
1,448.9 |
1,279.9 |
837 |
(64) |
03/23 |
22.9 |
1,370.7 |
1,194.1 |
780 |
(65) |
09/23 |
24.6 |
1,298,6 |
1,124.2 |
735 |
(69) |
03/24 |
57.0 |
1,378.9 |
1,250.7 |
662 |
(64) |
Note: *Includes restricted cash but not funds held on behalf of EIS/VCT investors. **Calculated based on share price at respective period-end.
We believe Molten’s recent realisations may be a sign of moderating valuation headwinds in the VC sector and reinforce the company’s approach to valuing its holdings. Both Endomag and Perkbox were sold at a modest uplift to their last carrying values at end-March 2024, implying multiples on invested capital of c 3.9x (quite a healthy return since the initial investment in 2018) and c 1.3x (a rather moderate but still positive return). Graphcore, a machine-learning semiconductor company, was sold to SoftBank for a price in line with its end-March 2024 carrying value, resulting in a 0.9x multiple of invested capital. The loss on this investment was limited by the downside protection embedded in Molten’s preference shares.
Molten’s new £180m three-year debt facility consists of a £120m term loan (drawn on day one) and an up to £60m revolving credit facility (compared to £90m and £60m under the previous facility, respectively). The drawdown of the revolving credit facility is subject to a maximum loan to value ratio of 12.5% that, based on Molten’s end-March 2024 gross portfolio value, would allow for a maximum £52m drawdown. The interest rate on the debt facility stands at SONIA + 5.5%, unchanged versus the previous facility. The upsized facility, together with Molten’s £57m cash at end-March 2024 and the recent realisation proceeds, gives it a good level of liquidity to execute on its objective of pursuing attractively priced primary and secondary investments (with an emphasis on the latter).
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Research: TMT
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