German Startups Group Berlin GmbH & Co KGaA (DE:GSJGn) is transforming its business model to an asset manager (through dedicated SPVs and an intended investment fund) and an online matchmaking platform for transactions in secondary shares in German start-ups and venture capital (VC) funds (scheduled for launch by the end of Q218). Management believes that this should present a completely new opportunity to create significant shareholder value at relatively low investment costs, given that similar marketplaces have reached standalone valuations beyond GSG’s market cap. A successful transformation could not only allow GSG to close the valuation gap to its NAV (which stands at c 30%), but also allow it to realise additional value.
Higher revaluation and disposal gains
GSG reported an EPS of €0.14 in FY17 vs a loss of €0.29 per share in the prior year. Earnings were supported by several portfolio exits, most notably the disposal of interest in Scalable Capital. Furthermore, seven of GSG’s key holdings were revalued upwards during the year, translating into a net revaluation gain of €1.1m compared with a loss of €1.9m in FY16. GSG decided to refrain from capitalising a certain amount of deferred taxes, which had a negative impact on EPS of €0.04. The company’s net debt declined to €2.5m from €5.2m in the prior year, mostly due to partial repayment of the short-term subordinated debt incurred in 2016.
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