- Net asset value up from $201.7mn to $208.1mn (662¢)
- Net cash of $11mn in mid-March 2024
- Bolt holding conservatively valued at $72mn
- Backblaze stock price soars 34 per cent post year-end
TMT Investments (TMT: 378¢), a venture capital company with a portfolio of more than 50 high-growth, internet-based companies, reported an annual pre-tax profit of $6.4mn after booking $7.4mn net gains on its investment portfolio last year.
Notable uplifts include a $5.4mn gain on its listed holding in Nasdaq-quoted cloud storage group BackBlaze (US: BLZE) and $14.6mn of cumulative gains on 11 unlisted holdings to reflect higher valuations following equity funding rounds. TMT’s investments in Collectly, a US patient billing platform for medical organisations, and Educate Online, a distance education platform for children and young adults both trebled in value to $6.4mn and $2.85mn, respectively. TMT’s stake in UK-based challenger bank 3S Money Club increased $3mn in value to $17.1mn, too.
Of course there were also negative valuation movements, one of which reduced the carry value of TMT's holding in Pandadoc, a proposal automation and contract management software provider, by $2.8mn to $8mn. It was based on an independent secondary share sale offer received by TMT. However, this should not negate the fact that the portfolio still delivered growth.
Since the period end, BackBlaze’s stock price has risen sharply following earnings upgrades, which has lifted TMT’s proforma NAV per share to 690¢. Management has taken the opportunity to sell down a further $4.2mn of its stake, which boosts the debt free group's cash pile to $11mn to fund follow-on or new investments, and still retains a holding in BackBlaze worth more than $30mn (95¢).
Bolt IPO to release hidden balance sheet value
It’s worth noting that TMT’s 1.26 per cent stake in international taxi and food delivery group Bolt is held in the accounts at $72.2mn (230¢) even though it had a read through valuation of $103.3mn following Bolt’s €628mn fundraising round in January 2022, led by Fidelity and Sequoia, that valued the fast-growing company at €7.4bn ($6.8bn). Since then Bolt has delivered double-digit annualised revenue growth, is forecast to move into profit this year and is planning to IPO in 2025.
Bearing this in mind, the stock price of closest comparable, Uber Technologies (US: UBER), a $160bn market capitalisation group, has surged 82 per cent since Bolt’s fundraising two years ago. In the real world, it’s highly unlikely TMT’s stake in Bolt is worth anything less than the $103mn implied valuation at the January 2022 fundraise, implying potential for a $31mn (99¢) revaluation in TMT’s accounts when Bolt launches its IPO. That’s simply not in the price.
Since I included TMT’s shares in my 2023 Bargain Share Portfolio they have risen 28 per cent in value, but they still trade on an unwarranted 45 per cent discount to proforma NAV of 690¢ and that excludes the hidden value in the Bolt stake. Buy.
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