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Just had a look and in 22 perkbox had sales of £39M, up 21% on previous. Grow at same level and pro-forma sales £57m for 2024. Perk valued at £140M thats 2.5x sales. Not the 20,30,40 times of the some of the others. of course I accept the TAM and technology of some of the others much more impressive but again just goes to show private valuation ranges can be vey very wide. For me, 10x is my max as a multiple of turnover, when we get to 20-25 I struggle but then I am more a public market guy.
Yes but molten first invested in perkbox in 2016. The issue with molten is the £128m invested in FY 21 and £311m invested in Fy 22. What does it say that the entity they first invested in 2016 comes out at slightly above breakeven. I have no issue with Molten's valuation per se, as I said earlier they are valuing according to recalibrated recent fund raises but the public markets are just not accepting the private market valuations. Different investors, different valuations and thats where we are.
The Perkbox valuation seems to have been pretty accurate as the sale was slightly above what it was held at
It certainly wasn't sold for a third of that value, which is what the SP valued it at.
JPM et all have agreed a £150m RCF against a £1.3bn private equity portfolio, a trained monkey could do that. There is no information content on the appropriate valuation on them putting that facility in place. Auditors no little about valuation in the real world, its not what they do. they check there is a process and valid inputs which as I have explained there can never be as they dont have a long term IV input, so its really driven by comparable markt deals in the private space, or in other words a herd instinct. When you asre in the realm of putting multiples at 20x, 30x, 40x revenue or whatever you want it is not science, it can never be. At the end of day it comes down to what these private market investors are prepared to pay on the funding date for a potentially large TAM.
As for the valuations the lenders and auditors have all had a look, especially since the Forward deal.
The lenders can evaluate quarterly.
If there are companies like Ledger that raised at same valuation as previously and others like Isar that did so at higher valuations then that can be taken as an indicator as well.
As for returning cash I believe it would be irresponsible to do so without looking also to scale back debt.
I am talking more about introducing dividends or buy backs as an option rather than point blank refusing.
They got a recent unexpected sale of Perkbox. Probably about £20m.
Stick it in a pot. Wait for another decent trade sale. For example, M-Files, which is profitable on 100m plus revenue. Maybe a few million from Graphcore. And then sell down some Revolut on the secondary. There were buyers recently for Stripe employee shares so there would be plenty of buyers for Revolut.
As I said activist investors and hedge funds are starting to sniff around holdings in unlisted companies.
The board need to get a bit more realistic rather than threatening to delist (as per annual report) if an activist fund gets involved.
Senator - you remind me very much of a frequent poster Sage on this board.
You make some good points but it is difficult to address them as a lot of things are jumbled together in one impenetrable paragraph.
Regarding Aiven. Their last accounts showed 67m Euro revenue. This was double the previous year. It also occurred when there was a significant downturn in the cloud market, which has since relaxed.
The market is valuing the MV holding at a very approximate 28m dollars. MV wrote down their holding from the 3bn valuation from £105m to £85m. So they have it valued at about 2.4bn. But divide that by the MV discount and it's seen to be worth about 800m.
Aiven has a close comparable listed stock in Confluent. Current sales to price ratio of 13.
If we conservatively assume latest year revenue of 100m then a valuation of 1.3bn would be fair.
If they have had a better year then this would of course be higher.
Rapid revenue increases are quite possible as UI Path doubled and even tripled revenue when it was taking off.
The point is that the current SP is reflecting a further discount.
I had big doubts about the Aiven valuation but I have started to get a better feeling about it.
Confluent say the Team is about 60bn dollars and growing at about 10% a year.
I am less sure about Thought Machine although there is talk of them looking to IPO and I doubt that would be likely if they were doing worse than previous years.
When you buy a Pref share the value has two components; the liquidation value and the probability of that and a Leap option with strike equal to the conversion price. Valuing that Leap option can never be precise as we have no market implied volatility input. Valuing the Prefs on basis everything is converted is not the correct way to do it because at the date of the report they havent converted. when the FCA do their review this will become more of an issue. This is to say nothing about the differnt priorities of different classes of prefs, can they vote or not, what liquidation preference they have, do they convert 1:1....there are loads of issues and I know that not one shareholder, including Blackrock and Irelands strategic fund has the answers to all this. This is why when you hear Mr Wilkinson talk about valuation it is so vague as he knows he cant answer properly because of NDAs. private company valuation is more fiction than fact im afraid. The last set of accounts from Thought Machine had sales of £42M and an operating loss of £73M. Last valuation was circa £2.2bn. Lets assume 2023 sales are £120M, thats still 20x Sales. Is that the right number? what about 10x, maybe 40x. Who really knows. what I do know is the FCA wont solve the difficulty of the material judgement behind private valuations and therefore it is fickle and when it moves can move a lot. Time might sort everything, but it will take time.
Nothing demonstrates the difficulty of private valuation as well as Aiven, the third largest holding. May 21 post money valuation $800M, Oct 21 $2bn, May 22 $3bn. Grow has it at £83m, my guess is they own circa 5%. So they are valuing it correctly at a discount to last round but the private market was on steroids in late 2021 early 2022 and as you can see from all PE listed valuations, SMT good liquid ex at 60% discount on privates if you assume their large publics deserve no discount, MSFT et all. The public markets just think the private market is way over the top, that is why there is a log jam in the capital recycling. On secondaries its a buyers market not a sellers as everyone knows this. Grow spent £311m in21/22 financial year, the largest amount in their history and realised £126m and yes got a £363m FV movement. They are now paying the price. Because they invest mostly in Pref shares which can have many different terms and because of NDAs cannot reveal all the details (and the detailed terms affect valuation) they and shareholders are fighting with their hands tied behind their backs. The information asymmetry makes these unsuitable public vehicles, its that simple. Also they cant return capital until they get much much bigger, otherwise they get diluted when the companies come back for funding which they do regularly in the A/B and seed stage. They have about £70m cash and undrawn £50M to support a portfolio of £1.3bn, there is no chance of a capital return or dividend and they cant sell at a fair price. This is why the people in the market describe conditions as among the worst ever but they caused it themselves by being too exuberant in 2021 and 2022.