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see cube hxxxs://cube.investments/cube-podcast-13-neil-johnson-duke-royalty-duke/
Note I am a holder so DYOR
Hi Razormac,
Their business model is pretty much as follows:
1. Raise money in the market;
2. Invest money in royalties;
3. Raise dividend;
4. Watch share price rise to contain yield;
5. Raise more money in the market (at a higher price given share price increase, therefore reduced dilution per £ raised)
6. Repeat as long as they can find suitable things to invest in...
Given the size of the US Royalty market, and the fact DUKE is first mover in Europe, there is a very long way to go before this train stops moving. This share is pure gold - rising dividends and capital growth.
I love the quote in the most recent RNS about raising the dividend once this new tranche of money is invested; think it says something about "approaching double digit yield". If you assume they're basing that on placing price of 44p, they're talking about hitting an annual dividend of probably 4p within 12m. The current dividend is 2.8p. If the share price reacts to contain yield to even 6%, a 4p annual dividend would equate to a share price of 66p.
What can go wrong? They are diversifying (geographically and by segments they invest in); so as they grow any risks reduce, but if one of their investee companies fails, they'd lose a proportion of their income; and if there's a recession or other event affecting multiple companies, their income may suffer too.
I love this share, I am heavily invested, and likely to buy more on any dips, but as always, DYOR!
Otherwys
anyone any ideas of what should be future growth rate for this company .i think it could be a good long term buy as they pay dividends and share price is growing very slowly but steadily .,but im still not sure about them .
with experience in this type of financing. Been looking at this company since reading an article in the Daily Mail. This seems unique to North America and has been slightly restructured for the Europeans. The yield is currently 6% or thereabouts and their 'partners' seem to be well established businesses going through a period of growth. Dilution is obviously the downside but the cash raised goes back into the business with additional partner(s) Free float is small which should prevent the usual wild sp fluctuations and MC increase potential going forward. Seems quite a niche market for now....
Jim Armitage has put this up as a buy. Very interesting model indeed.
" Duke Royalty Limited (AIM: DUKE), the royalty financing company, is pleased to announce a proposed conditional placing and subscription ("Fundraising") to raise at least �20 million, before expenses, by way of a Placing of New Shares at a price of 40 pence per share (the Issue Price) and a Subscription by certain overseas investors on the same terms. The net proceeds of the Fundraising will allow the Company, inter alia, to continue to finance its diversified pipeline of royalty financing opportunities. Highlights � Proposed Placing and Subscription to raise gross proceeds of at least �20 million � Net proceeds to diversify portfolio of royalty investments and provide working capital � Two new potential royalty partners in advanced stages of negotiation � Additional proceeds to execute on new identified opportunities and/or follow on investments in existing royalty partners � Following deployment of capital, Duke could have exposure to up to 6 underlying companies through four Royalty Partners � Increased dividend yield expected following deployment of capital � Issue price of 40p per share" Excellent news, fundraising at minimal discount, targets for investment at very advanced stages of negotiation, returning >13% yield, and an expected dividend hike once completed. Not quite as I'd anticipated but very happy with this all the same. Hope others join the party soon! GLA Otherwys
First! So, off the back of their first royalty deal DUKE announced a dividend of 2p per quarter: that's dividend payments of �900k pa from annual royalty income of c. �950k. A little bit stretched perhaps, but since then they have announced further deals with Lynx which are estimated to bring in another �840k pa. They have tied up all their original investment capital, they have a strong pipeline of opportunities and will be looking to raise more capital quite soon. The DUKE model is as follows: raise capital invest capital in royalty deals increase dividend share price appreciates because of increased dividend raise more capital at higher share price rinse and repeat... Having invested all their available capital, and having a dividend that's now I estimate just under c. 2x covered by income, I am expecting DUKE's next move to be the announcement of an increased quarterly dividend. Based on last dividend announcement having been towards the end of September, I think we will see this land just before Christmas. How much they will increase the dividend by is anyone's guess, but here are some indicators of what it could do: 0.5ppspq (current div) gives yield of 4.8% at current share price of 42p 0.6ppspq = 5.7% yield (or 4.8% yield at a share price of 50p) 0.7ppspq = 6.7% yield (or 4.8% yield at a share price of 58p) So here is a share with both income and capital growth potential. I am very happy to have found this still on the ground floor, and I will be adding as and when I can. DYOR, GLA and hope to see some other investors on this board in due course! Otherwys
Hi gg_man I bought in last December, waiting patiently for their first deal, with only 7 million shares currently in issue any positive news could see the share price bound up as it did back in September when they announced the collaboration with Oliver Wyman and went up to 70p. Having said that I will be happy to stay invested for the medium to long term. Given that the share price includes assets of £2.3 million on the books from Praetorian there is very little downside and huge possible upside. Balance Sheet As at period end, the Company's Net Asset Value stood at GBP4,000,726. This was split between the net current asset position of GBP1,669,985 and the value of the remaining legacy investment portfolio of GBP2,330,741. It is the Company's intention to dispose of this legacy investment portfolio in due course when suitable bids are found. However I am pleased to report that the Company remains well capitalised during the current transitional period while it actively searches for suitable investment opportunities to implement its new investment mandate.
Been following DUKE since inception...has anyone bought in?