Draper Esprit — Strong H122, FY22 guidance revised upwards

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Research: Financials

Draper Esprit — Strong H122, FY22 guidance revised upwards

Draper Esprit’s management confirmed that H122 NAV per share is expected to be not less than 885p (31 March 2021: 743p), growth of 19% in the period. With portfolio activity remaining strong, management revised its FY22 fair value growth guidance from 15% at the start of the year to c 35% ‘subject to wider market conditions’. Although growth in NAV per share lags fair value growth (H122 estimates: 26% fair value growth, 19% NAV per share growth), 35% fair value growth might suggest an NAV per share of c 930–950p for 31 March 2022, close to where the share price has been trading recently. Management also confirmed an imminent rebranding, including a change of name ‘to better reflect [the group’s] strategy in its latest phase of growth’. Draper Esprit’s H122 results are due on 29 November 2021.

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Financials

Draper Esprit

Strong H122, FY22 guidance revised upwards

H122 trading update

Listed venture capital

5 November 2021

Price

1,042p

Market cap

£1.59bn

Net cash (£m) at 30 September 2021

156

Shares in issue

153.0m

Free float

93%

Code

GROW

Primary exchange

LSE

Secondary exchange

Euronext Dublin

Share price performance

Business description

Draper Esprit is a London-based venture capital firm that invests in the European technology sector. It has a portfolio of c 70 investee companies and includes a range of funds (seed, EIS and VCT) within the group, as well as its flagship balance sheet VC fund.

Analysts

Richard Williamson

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

Draper Esprit is a research client of Edison Investment Research Limited

Draper Esprit’s management confirmed that H122 NAV per share is expected to be not less than 885p (31 March 2021: 743p), growth of 19% in the period. With portfolio activity remaining strong, management revised its FY22 fair value growth guidance from 15% at the start of the year to c 35% ‘subject to wider market conditions’. Although growth in NAV per share lags fair value growth (H122 estimates: 26% fair value growth, 19% NAV per share growth), 35% fair value growth might suggest an NAV per share of c 930–950p for 31 March 2022, close to where the share price has been trading recently. Management also confirmed an imminent rebranding, including a change of name ‘to better reflect [the group’s] strategy in its latest phase of growth’. Draper Esprit’s H122 results are due on 29 November 2021.

Period
end

Plc cash*
(£m)

Gross portfolio value (£m)

NAV
(£m)

NAV/share
(p)

P/NAV
(x)

03/20

34.1

702.9

659.6

555

1.88

09/20

62.1

702.4

714.7

600

1.74

03/21

160.7

983.8

1,033.1

743

1.40

09/21**

156

1,345

1,354

885

1.18

Note: *Includes restricted cash but not funds held on behalf of EIS/VCT investors. **Provisional unaudited H122 interim figures.

With continuing strong market conditions, the positive momentum Draper Esprit saw in H221 continued into H122. Draper Esprit’s H122 performance was driven by substantial contributions from Revolut (Series E) and Trustpilot’s post-IPO performance, as well as new financing (up) rounds at Aircall (Series D), Ledger (Series C), Form3 (Series C), N26 (Series E), Aiven (Series C) and public market contributions from Cazoo (NYSE SPAC) and UiPath (NYSE).

In terms of cash, the group invested £165m from its balance sheet in H122, tracking well-ahead of management’s guidance for the year of c £200m. Total investment in H122 reached £169m (H121: £50m), including £4m of EIS and VCT co-investment. Balance sheet cash (including restricted cash) at 30 September 2021 stood at £156m (31 March 2021: £161m), reflecting cash realisations of £67m (H121: £106m) and £108m of net proceeds from the June 2021 placing.

During the period, Draper Esprit also completed a move to the premium listing segment of the Official List and joined the FTSE 250 Index.

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