Edison Investment Research Limited
London, UK, 4 February 2021
Draper Esprit (GROW): Initiation - Europe's leading pureplay listed VC
Draper Esprit is the leading listed VC in Europe, committing £120m of funding annually to European start-ups, with a proven track record (over 125 deals since 2006, US$13bn of exits) and a high-quality management team. Since 2016 Draper Esprit has been scaling its model, building the breadth and maturity of its underlying portfolio, with multiple core holdings ready to exit in 2021, market conditions permitting. Through a diversified investment holding company, Draper Esprit provides liquid exposure to a growing portfolio of Europe's leading, high-growth tech start-ups, an investment class that is hard to access for the public market investor. In our view, Draper Esprit's 15.1% FY16-20 NAV/share CAGR, together with the latent value in its portfolio, justify a premium rating.
Investors increasingly recognise that Draper Esprit warrants a premium as a rapidly scaling leader in the technology sector, which has delivered a 15.1% FY16-20 NAV/share CAGR, with a promising portfolio of investments and a growing fund management business. As such, the company trades at 1.28x historical NAV (H121: 600p). Catalysts for a re-rating include further scaling of the business, a listing on the main market, growth in third-party fee income, and successful exits and IPOs.
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