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Draper Esprit looks stable

“There’s been no need to bail people out” reports the venture capital firm’s CEO
Draper Esprit looks stable

On the day the UK went into lockdown, Draper Esprit (GROW) told investors it had enough cash to support its portfolio companies, 80 per cent of which were deemed to possess sufficiently robust balance sheets and cost controls to trade until the end of 2020.

IC TIP: Buy at 448p

Since then, the tech-focused venture capital firm has been encouraged by the resilience of its investments. “We’ve not seen anywhere near the demand we thought we might see,” chief executive Martin Davis told us. “There’s not been the need to bail people out, which is very encouraging.”

Given the sectors Draper is oriented towards – cloud infrastructure, online gaming, digital healthcare and digital payments among them – that shouldn’t be much of a surprise. Nonetheless, the financial impact on companies that are more directly affected by Covid-19 and lockdown led to lower growth estimates for 2020 and 2021, and a dip in net asset value (NAV) to 555p per share at the end of March. Last September, this was 574p.

Initiating coverage with these results, Berenberg analysts forecast NAV will rise to 624p per share by March 2021, and to 742p by the end of FY2022.

Draper Esprit (GROW)    
ORD PRICE:448pMARKET VALUE:£518m  
TOUCH:447-449p12-MONTH HIGH:620pLOW:255p
DIVIDEND YIELD:NILPE RATIO:13  
NET ASSET VALUE:570pNET DEBT:2.1%*  
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p) 
20161.72988nil 
20177.26189nil 
20186.1111115nil 
20196.1111115nil 
202011.34034nil 
% change+84-64-70- 
Ex Div:n/a    
Payment:n/a    
*Includes lease liabilies of £1.3m