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Research: Investment Companies
Molten Ventures released its trading update for H125 (ending September 2024), expecting a c 3% NAV per share decline versus end-March 2024 to 644p, mostly due to c £30m negative foreign exchange effects (2% of opening gross portfolio value). As discussed in our September update note, Molten experienced a significant pick-up in exit activity, and collected £76m in cash proceeds in H125. Molten also announced that Martin Davis will step down after five years as the company’s CEO and will be succeeded with immediate effect by Ben Wilkinson, who has been Molten’s CFO for the last eight years. Andrew Zimmermann (finance director) will be appointed interim CFO. We also note that Molten’s shares re-entered the UK flagship top 250 index in the period. The shares now trade at a c 47% discount to NAV.
Molten Ventures |
Strong exits and stable NAV/share ex FX in H125 |
H125 trading update |
Listed venture capital |
01 November 2024 |
Share price performance
Business description
Analysts
Molten Ventures is a research client of Edison Investment Research Limited |
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Molten Ventures released its trading update for H125 (ending September 2024), expecting a c 3% NAV per share decline versus end-March 2024 to 644p, mostly due to c £30m negative foreign exchange effects (2% of opening gross portfolio value). As discussed in our September update note, Molten experienced a significant pick-up in exit activity, and collected £76m in cash proceeds in H125. Molten also announced that Martin Davis will step down after five years as the company’s CEO and will be succeeded with immediate effect by Ben Wilkinson, who has been Molten’s CFO for the last eight years. Andrew Zimmermann (finance director) will be appointed interim CFO. We also note that Molten’s shares re-entered the UK flagship top 250 index in the period. The shares now trade at a c 47% discount to NAV.
Period |
Plc cash* |
Gross portfolio value (£m) |
NAV |
NAV/share |
Discount/premium to NAV (%)** |
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) |
09/24*** |
82 |
1,343 |
N/A |
644 |
(37) |
Note: *Includes restricted cash but not funds held on behalf of EIS/VCT investors. **Calculated based on share price at respective period-end. ***Based on Molten’s H125 trading update.
NAV stability supported by exits and up rounds
Molten highlighted a £20m fair value uplift at constant currency, assisted by exits at or slightly above carrying value and a modest net uplift in the fair value of its existing portfolio. We note that this reflects several recent funding rounds of Molten’s core holdings carried out at higher valuations versus prior rounds (eg ISAR Aerospace, ICEYE, RavenPack, Riverlane), as well as the secondary share sale of Revolut (see our previous note for details). Overall, Molten booked £110m of fair value increases, partly offset by reductions of £90m.
Well-positioned to pursue market opportunities
Molten’s significant realisation activity translated into a cash position of £82m at end-September 2024, providing it with a solid level of dry powder to pursue further attractively priced investments. We also note that the company recently secured a £180m three-year debt facility, consisting of a £120m term loan (drawn on day one) and a revolving credit facility of up to £60m. The completion of Molten’s exit from M-Files will bring total proceeds from exits so far in FY25 to £124m (or 9% of Molten’s opening gross portfolio value), ahead of earlier management guidance of £100m.
Molten invested £51m in H125, including c £19m in the secondary acquisition of c 97% of the Connect Ventures Fund I. The latter is a 2012 vintage fund holding minority positions in eight European businesses, with c 85% of the value attributable to Typeform (a provider of software solutions for surveys and forms) and Soldo (a payment and spend automation platform). A further £12m was invested via the EIS/VCT funds. In line with its recently updated capital allocation policy, the company completed a £10m share buyback programme in September 2024.
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Research: TMT
Prior to its AGM on 31 October Filtronic confirmed that it was confident of delivering FY25 results in line with market expectations. It expects a higher revenue weighting in H125 reflecting the phasing of orders from its largest customer. Filtronic has made good progress with its technology roadmap, manufacturing capacity and engineering hires, and is in advanced discussion for further contracts in the space and aerospace & defence markets, supporting continued growth of the business.