Full year trading update and notice of results

RNS Number : 5055W

Draper Esprit PLC

26 April 2021

 

Draper Esprit PLC

26 April 2021

Draper Esprit Plc

("Draper Esprit", "the Group" or the "Company")

Full year trading update and notice of results

Draper Esprit (LSE: GROW, Euronext Growth: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, today announces an update on its portfolio and NAV (unaudited) ahead of its final results for the year ended 31 March 2021, which are scheduled for release on 14 June 2021.

Highlights:

· NAV per share (unaudited) is expected to be not less than 728p (31 March 2020: 555p).

· Gross Portfolio Value (unaudited) is expected to be not less than £955 million (31 March 2020: £703 million).

· Gross Portfolio increase in fair value (unaudited) is expected to be not less than £330 million (47%) over the year (year to 31 March 2020: £59 million).

· Increased investment cadence with £96 million invested by the Group's balance sheet ("PLC") in the second half of the year, compared to £32 million in the first half, with a further £34 million from EIS and VCT co-investment bringing the total for the year to £162 million (prior year £128 million)

· Realisations in the year ended 31 March 2021 of £206 million (year to 31 March 2020: £40 million)

· Net proceeds of £107 million from equity raise in October 2020, which provided significant firepower to increase our investment cadence in the second half.

· Available cash at year-end of £161 million

· Post year-end investment as lead investor of $60 million Series B round in FintechOS.

· Strong deal pipeline with over £50 million of deals approved by the investment committee and further visibility on over £75 million of near-term qualified pipeline.

Year-end 31 March 2021 (unaudited)

The fair value growth in the period reflects strong performance across the breadth of the portfolio. Despite currency headwinds of over £50 million, the fair value increase of over 47% is significant relative to the targeted 20% annual gross portfolio returns through the cycle. With £161 million of cash reflecting the strong realisation performance in the year of £206 million, the anticipated NAV per share of not less than 728p is a 31% increase on the 555p per share at 31 March 2020.

There is significant ongoing activity within the portfolio and therefore, relative to other year-end periods, valuations are more than usually subject to change leading up to the final results scheduled for 14 June 2021. The Company has noted the recent UiPath IPO and has reflected the IPO pricing in today's unaudited numbers.

Investments and Realisations

Full year investment of £128 million by PLC includes £51 million in primary deals (new investments), £34 million in follow-on deals (existing investments), £31 million via Earlybird and £12 million via Seed Fund of Fund investments. As intended at the time of the equity placing in October 2020, the Company increased the investment cadence in the second half by investing £96 million, compared with £32 million in the first half. Investments for the year include lead positions in earlier stage investments Ravelin, Agora, Riverlane and Focal Point as well as larger, later stage rounds in Cazoo, PrimaryBid, CoachHub and an innovative Enterprise Software Company (to be announced). We have also executed on the identified pipeline of significant follow-on opportunities with investments into Graphcore, Endomag, M-Files and Freetrade.

The £206 million of realisations includes proceeds from full exits from Peak Games, TransferWise, and Decibel, and partial disposals of holdings in UiPath and Trustpilot.

Focus for FY22 (to 31 March 2022)

The focus for the forthcoming year is to continue to scale the group, both in terms of investment into the portfolio and into the people, systems and processes around the investment team. The increased investment cadence in the second half of FY21 has continued into the new financial year with a pipeline of over £50 million of deals approved by the investment committee and a further qualified near-term pipeline of over £75 million. During the past year we have hired 6 new people into the investment team and platform teams that support the investment function.

The investment team continues to focus on both primary and follow on investments, identifying the growth opportunities from across our deep network in the European market and within the existing portfolio. It is anticipated that capital deployment for the coming year will be over £150 million from the PLC balance sheet, including further commitments being made to the Growth Fund and Seed Fund of Funds programme, in addition to Earlybird Fund VII and Earlybird Growth Opportunities Fund.

Progress continues with third party capital raising for the Growth Fund, and with the acquisitions of the non-controlling interests over the past year of Encore Ventures (the EIS manager) and Elderstreet Investments Limited (the VCT manager) we have continued to broaden the investor base, with additional capital raised that co-invests alongside the PLC and further builds our third party income.

Martin Davis, CEO Draper Esprit commented:

"The market for tech company investments has been exceptionally strong since the pandemic, highlighting the importance of technology to many aspects of our future. Our impressive fair value increase reflects that, as well as the ability of our Partners to identify companies with potential for high growth. The nature of venture capital means that investments must be made throughout the cycle. Today's strong returns are partly down to investments made when things were less buoyant.

"It is gratifying to see the results of our long-term investments continuing to be demonstrated by portfolio value and realisations. We have been able to maximise our realisations and, alongside our capital raise, have been able to reinvest them into the next generation of opportunities.

"When we raised funds in October, we set goals to increase our investment cadence significantly, to capture more investment opportunities and take larger stakes in our established winners. All of which we have achieved. We look forward to strengthening the portfolio further to enable us to outperform throughout the cycle."

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Enquiries

Draper Esprit plc Martin Davis (Chief Executive Officer) Ben Wilkinson (Chief Financial Officer)	[phone]
Numis Securities Nominated Adviser & Joint Broker Simon Willis Richard Thomas Jamie Loughborough	[phone]
Goodbody Stockbrokers Euronext Growth Adviser & Joint Broker Don Harrington Charlotte Craigie Linda Clarke	[phone]
Powerscourt Public relations Elly Williamson Donjeta Miftari	[phone] / [phone]

About Draper Esprit

Draper Esprit is one of the most active venture capital firms in Europe, investing in disruptive, high

growth technology companies. We believe the best entrepreneurs in Europe are capable of building

the global businesses of the future. We fuel their growth with long-term capital, access to

international networks and decades of experience building businesses.

Currently, Draper Esprit is a shareholder in a diverse portfolio of 67 companies with 15 of those part

of our core portfolio which accounts for over 60% of our holdings. Our core companies include

UiPath, Aircall, Graphcore and Revolut. We invest across four sectors: Consumer Technology,

Enterprise Technology, Hardware and Deeptech, and Digital Health and Wellness, with highly

experienced partners constantly looking for new opportunities in each. We look for high-growth

companies with strong IP, powerful technology, and the management teams to deliver success.

They operate in new markets, with serious potential for global expansion. We also look for

businesses with the potential to generate strong margins to ensure rapid, sustainable growth in

substantial addressable markets.

Draper Esprit provides an opportunity for public market investors to access these fast-growing tech

businesses, without having to commit to long term investments with limited liquidity. Since IPO in

June 2016, we have deployed circa £550m+ capital into fast growing technology companies and

have realised over £300m. In October 2020 we raised gross proceeds of circa £110m to help us

capitalise on a European VC market which is expanding rapidly but is still less than one quarter of

the combined size of the US and European market by value. It will also allow us to capitalise on the transition to a digital future that has been given added impetus as a result of the recent pandemic.

For more information, go to https://draperesprit.com/

 

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