The promise of investing in early-stage technology is fast revenue growth and capital appreciation. Judging by its full-year results, venture fund Draper Esprit (GROW) has done a good job hitching itself to that high-risk wagon, as the value of its portfolio more than doubled to £594m in the 12 months to March 2019.
That uplift was partly powered by £215m raised from two equity placings, which alongside a further £64m in inflows to the enterprise investment scheme (EIS) and venture capital trust (VCT) funds helped the group to invest £226m across 21 companies, including further capital injections in all 12 of Draper’s existing portfolio firms.
It also included a £106m investment in the funds of strategic partner Earlybird, although repeat stakes in venture capital groups should be tempered by chief executive Simon Cook’s admission that such deals are “really hard to find”, regardless of low liquidity in European technology.
They can also be highly lucrative, judging by the £18.1m of cash already generated from flipping stakes in four companies acquired as part of the Seedcamp deal in October 2017 for £17.9m. Residual stakes, including in $3.5bn cross-border payments outfit Transferwise, are still above the original cost.
Analysts at Numis have raised their net asset value (NAV) per share forecast to 603p for March 2020, and to 709p 12 months later.
DRAPER ESPRIT (GROW) | ||||
ORD PRICE: | 487p | MARKET VALUE: | £574m | |
TOUCH: | 481-487p | 12-MONTH HIGH: | 650p | LOW: 440p |
DIVIDEND YIELD: | NIL | PE RATIO: | 4 | |
NET ASSET VALUE: | 524p | NET CASH: | £50.4m |
Year to 31 Mar | Fee income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | nil | neg | -6.0 | nil |
2017 | 1.7 | 33.7 | 80.8 | nil |
2018 (restated) | 7.2 | 60.9 | 89.0 | nil |
2019 | 6.1 | 111 | 115 | nil |
% change | -15 | +83 | +29 | - |
Ex-div: | na | |||
Payment: | n/a |