Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Molten Ventures PLC (GRWXF, Financial) reported a strong cash position with 82 million available, providing a solid foundation for future investments.
- The company exceeded its realization guidance, achieving 124 million in realizations, well above the 100 million target.
- Successful integration of Forward Partners has been smooth, enhancing both asset and team capabilities.
- The company has a diverse portfolio with investments in emerging technologies such as AI, climate tech, and fintech, positioning it well for future growth.
- Molten Ventures PLC (GRWXF) has a robust capital allocation policy, focusing on both primary and secondary investments, which is expected to drive future returns.
Negative Points
- The gross portfolio fair value movement was down slightly by 1%, primarily due to FX headwinds.
- Average revenue growth in the core portfolio decreased from 72% to 48%, reflecting slower growth in the wider market.
- Some portfolio companies, like Thought Machine, have experienced delays in customer contract implementations, impacting expected revenue.
- The company is trading at a significant discount to its net asset value, which could indicate market skepticism.
- There is uncertainty regarding the impact of potential US tariffs on companies with US revenues, which could affect future performance.
Q & A Highlights
Q: Can you comment on the confidence in valuations for companies currently raising funds and the opportunity pool for secondary transactions?
A: Benjamin Wilkinson, CFO, explained that secondary transactions are attractive due to liquidity constraints, allowing Molten Ventures to access good companies at discounts similar to public market levels. The emerging portfolio is managed robustly, with capital deployment expected to be around 20 million, indicating limited capital requirements for support. Andrew Zimmermann, Interim CFO, added that recent fundraising activities have been positive, with valuations at or above current NAVs, supporting their valuation methodology.
Q: Why did you not apply the full uplift for Revolut's valuation, and what are the prospects for Thought Machine's valuation?
A: Benjamin Wilkinson explained that Revolut's valuation was not fully uplifted due to a focus on current commercial traction rather than future potential. For Thought Machine, the valuation was adjusted due to delayed customer contracts, but there is potential for uplift as revenue comes back. The realization of strategic premiums will likely occur during an IPO or trade sale.
Q: Can you provide more color on the types of revenue models in your portfolio and the impact of US tariffs on your companies?
A: Benjamin Wilkinson highlighted that recurring revenues are valued higher due to their stability and predictability. Regarding US tariffs, it's too early to assess the impact, but many portfolio companies have US operations, which may mitigate potential effects.
Q: What is the outlook for realizations in FY26, and how are current fundraising activities affecting valuations?
A: Benjamin Wilkinson stated that while significant transactions have occurred, additional realizations are expected, though not at the same scale. Fundraising activities have generally supported current valuations, with some companies reaffirming previous valuations, indicating stability despite market conditions.
Q: Are there plans for more share repurchases, and how are preference shares structured in your investments?
A: Benjamin Wilkinson mentioned that while share repurchases are not currently planned, they may be reconsidered with significant new realizations. Preference shares are a standard feature in venture capital, providing downside protection by prioritizing capital recovery in case of liquidation, and this approach remains consistent across the portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
