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Exploiting share price dislocations

Five small-cap funds are primed to deliver material gains to shareholders
Exploiting share price dislocations

■ Portfolio company Backblaze reported to be eyeing up IPO in 2021
■ Global cloud storage services market set to grow 175 per cent by 2025

Shares in TMT Investments (TMT:580¢), a venture capital company that invests in high-growth, internet-based companies, has rallied 76 per cent since I turned buyer again, at 318¢ (‘On the hunt for recovery buys’, 6 July 2020). This means that they are now rated on a premium to pro-forma net asset value (NAV) of $130m (446¢) after taking into account the $41m cash windfall from the sale of TMT’s stake in Pipedrive, a customer relationship management (CRM) software tool developer that is being purchased by US investment firm Vista Equity Partners for $1.5bn. The disposal realises a $29m profit, too.

However, that gain looks small fry compared with the upside potential upside on TMT’s 10.85 per cent holding in Backblaze, a cloud storage and data back-up company with more than 600,000 customers. That’s because news agency Reuters reports that Backblaze is targeting an IPO in 2021 that could value the company at around $1bn, a valuation reflecting forecasts that the global cloud storage service market is estimated to grow from $50.1bn this year to $137.3bn by 2025 (MarketsandMarkets estimates).

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