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Draper Esprit growth prospects undimmed

Venture capital group taps the market for another £111m
Draper Esprit growth prospects undimmed
  • Shareholders tapped to boost “investment firepower”
  • Fundraise follows a blistering period of portfolio growth

Full-year numbers for Draper Esprit (GROW) arrived this week in a hail of updates from the listed venture capital firm. Top of the agenda was a plan to raise around £111m through the sale of new shares – the fifth time the group has tapped equity investors for at least £100m in secondary funding since its 2016 IPO.

The terms of the placing – an 8 per cent premium to net asset value, and just 4.6 per cent below the shares’ undisturbed price – reflect much-improved market sentiment. This time round, retail shareholders were also given the opportunity to invest on level terms with the institutional investors and directors, thanks to a subsidiary offer via PrimaryBid.

The equity market access group was one of several later stage investments for Draper in an exceptional year to March. Alongside new stakes in used car online marketplace Cazoo and fraud detection specialist Ravelin, Draper also banked £206m of cash realisations after exiting or selling down positions in Peak Games, Transferwise and recent London market debutant, Trustpilot (TRST).

This helped boost the portfolio value by 58 per cent, highlighting not only strong investor demand and excellent market liquidity in technology companies, but also Draper’s ability to pick winners. Just three of the group’s 17 largest investments saw negative revaluations over the last year, and then only by a combined £3.6m, against a total fair value gain of £357.8m.

After a blistering period, growth expectations have been revised down to 15 per cent for the coming financial period. But a widening pipeline of follow-on investments justifies the premium to NAV. Buy.

Last IC View: Buy, 650p, 30 Nov 2020

DRAPER ESPRIT (GROW)  
ORD PRICE:828pMARKET VALUE:£1.2bn
TOUCH:827-829p12-MONTH HIGH:898pLOW: 430p
DIVIDEND YIELD:NILPE RATIO:4
NET ASSET VALUE:743pNET CASH:£158m
Year to 31 MarFee income (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.6733.780.8nil
20187.1660.989.0nil
20196.10111115nil
202011.340.434.0nil
202112.5267208nil
% change+11+562+512-
Ex-div:n/a   
Payment:n/a