Fingers crossed Steph. I think I'll close my trade at 1180ish when it gets up there again but will remain a long-term holder in the ISA.
Off-topic but re K3 Capital (as you now have some), I've written a couple of updates that summarise what they have been up to in the last year and why I have high hopes for their upcoming results.
K3C cannot stay under the radar for much longer and I think the results in the next few weeks will bring them a lot more attention. Interestingly, Duff & Phelps - who runs businesses of the same type as K3C - were bought for $4.4bn by Stone Point in January this year. K3C Market is just £260m. DYOR and good luck.
"As the Covid-19 pandemic continues to push the global economy into a sustained recession, Quantuma is only the latest in a string of consultancies specialising in insolvency and corporate recovery services to attract backing. The likelihood of heightened business for the restructuring consulting segment was recently illustrated by a consortium of investors led by Stone Point Capital and Further Global, who were willing to sink an estimated $4.2 billion into the purchase of Duff & Phelps."
K3C's Annual results will be released in late October rather than late September this year due to its "transformational year".
I decided to look back at what has occurred since that financial year started in June 2020 and it's true there has been a huge amount of activity and acquisitions. As per their website: "The acquisitions are in line with K3’s strategy to acquire complementary and value accretive businesses to build out its existing SME focussed service lines."
* Aug 2020: Acquisition of Quantuma (restructuring and insolvency, corporate finance, forensic accounting and investigations) for £27m, immediately earning enhancing.
* Sep 2020: Acquisition of rannd (helps businesses to secure R&D tax credits from the government in return for a percentage of the amount achieved)
* Feb 2021: Launch of K3 Hub, a new member network for intermediaries that offers a single point of contact for K3C's many subsidiary companies.
* Mar 2021: Forecast upgrade of EBITDA of no less than £12 million. Acquisition of inTax (leading tax investigations team is comprised of Chartered Tax Advisers and former HMRC Inspectors) and Aspect Plus (Insolvency Practioners).
* Apr 2021: Another Forecast upgrade: Revenue expected to be in the region of £45 million and Adjusted EBITDA* of no less than £13.25 million.
* Jun 2021: Revenues approximately £46.0 million and adjusted EBITDA* of not less than £14.25 million
* Jul 2021: Acquisition of Knight R&D (specialist research and development (R&D) tax advisory firm servicing UK SMEs)
* Jul 2021: Acquisition of Knight Corporate Finance Group (specialist M&A advisory firm within the telecoms and tech sector)
I'm forecasting a large sale of Trustpilot by the end of next week as the 180 day tie-in period looks to have expired. It has dropped a bit but will still return a huge markup on the initial investment.
Trustpilot IPO announcement on 23rd March:
The Company's total investment to date has been £29.7 million and as of our interim results to 30 September 2020 our holding was valued at £80.9 million. As part of the IPO, the Company will be selling down part of its holding, resulting in proceeds of £78.3 million. The Company will continue to hold 7.9% in shares amounting to £85.5 million (subject to any exercise of the overallotment option during the period to admission) based on the Trustpilot share price on 23 March 2021. The Company's continued holding will be subject to a customary 180-day lock-up period from the date of admission in line with other institutional investors in Trustpilot.
Another positive surprise. Many of the companies in GROW's portfolio are getting big wins.
"JP Morgan has selected UK fintech Thought Machine to overhaul its core banking systems across the banking giant’s entire US retail network.
The partnership will see JP Morgan’s Chase retail bank moved onto Thought Machine’s Vault platform in the US.
AltFi understands Thought Machine is also doing some work for JP Morgan on the recent launch of Chase in the UK.
It’s another big client win for Thought Machine, which in the last few months has provided the core banking for Standard Chartered launching its digital bank Mox in Hong Kong, and Sweden’s SEB launching UNQUO—a banking service for SMEs and entrepreneurs.
“JPMorgan Chase represents one of the most ambitious, powerful financial institutions in the world—and our joint work signals to the finance industry that cloud native core banking technology is the future for financial services,” said Thought Machine CEO and founder Paul Taylor.
"...Berenberg said Draper Esprit, which it selected as a top pick for 2021, had "not disappointed" thus far, yielding a return of 65% year-to-date and outperforming the FTSE 250 by 53% and the US and European tech indices by around 45% and 37%, respectively.
The German bank also highlighted that since June, markets had pushed on as valuations continue to expand in the technology sector, noting that this, combined with some new investment updates, gives it confidence that the company will outperform prior estimates with more capital deployed and the company achieving higher uplifts to its portfolio fair value..."
I wrote to K3C this morning about results and meeting dates and received a quick response from the CFO. Seems reasonable given the circumstances and I'm still confident that it will be worth waiting for.
"Given our transformational year through acquisitions in FY21, we decided to go out with our results 4 weeks later this year – purely in order to ensure we had appropriate time with the audit and also preparing a meaningful annual report as it will be quite a deviation this year due to our numerous revenue streams.
We will make an announcement on dates in the coming week or so but are aiming for late October. I expect we will continue with our investor meets company presentations, so look forward to updating you in due course."
K3 Capital play their cards pretty close to their chest when it comes to forthcoming updates but last year's Final Results were released on 22nd September. Last year they also held an Investor presentation on 24th September.
I hope and expect that we should hear some news in the next week.
Good to see Draper partner, Nicola McClafferty, on the judging panel. Another opportunity to identify the best and the brightest new companies and fund them early on.
Maybe the RNS appeals to headline writers: "Soaring demand for car seller Cazoo gives valuation boost to backer Draper Esprit". All good publicity...
"Both Liberum and Numis have positive reactions to the portfolio update.
Numis emphasises that Draper Esprit will also benefit from an £99 million uplift in the July Series E $800 million funding of Revolut, and a £38 million uplift from a marking to market of its Trustpilot holding.
It says: ‘These known uplifts total £171 million which compares against the March 2021 gross portfolio value of £984 million (17% return), suggesting another period of strong returns for the group.’
Liberum is equally bullish, saying: ‘We estimate recent funding rounds by portfolio companies added 74p (10%) to the March NAV….Strong gains from the public technology companies since March should also support strong NAV performance when the releases its trading update next month.’
I can't say that Form3, in GROW's portfolio, has caught my attention before but it turns out it is now handling a “double-digit percentage” of all UK Faster Payments and they are planning a US float. I think we have focused on a few well-known names but there are lots of other hidden gems owned by Draper Esprit.
Form3 provides a cloud-native, real-time payment technology platform to enable banks and regulated fintechs to create amazing products and experiences.
Good analysis Steph. Re Cazoo, the wording is not as clear as it should be but as DMGT's large gains are listed elsewhere it appears to refer just to GROW: "and venture capital firm Draper Esprit will receive approx $80M in cash from the transaction proceeds."