Shares of Molten Ventures, a venture capital fund focused on technology, could rise by more than 180%, according to Berenberg. London-listed Molten, formerly called Draper Espirit, offers investors exposure to venture capital (VC) investing in the high-growth technology sector. It is invested in British GPU maker GraphCore, fintech banks N26 and Revolut, and U.S.-listed AI company UiPath . Berenberg said Molten is currently trading at a 67% discount to its last-reported net asset value (NAV). But as market valuations return to normal and Molten is able to liquidate some of its investments, the substantial discount to NAV should decrease, it added. This should, in turn, result in a substantial increase in Molten’s share price. “Adding the growth of the company’s portfolio into the equation, we think that now is the time to gain exposure to the VC space before the company re-rates,” said Kurran Aujla, technology hardware analyst at Berenberg, in a note to clients titled “Red-hot upside on offer” on July 14. Berenberg expects shares of Molten, which trades via the ticker GROW , to increase to £7.25 ($9.50) a share over the next 12 months. The stock is down by nearly a third over the last 12 months. GROW-GB 1Y line Molten’s NAV per share stands at £7.80 for the financial year 2023, down from £9.37 in the previous year. Aujla’s note said that most of this decrease occurred in the first half of the year when the gross portfolio value (GPV) declined by 17% due to falling valuations. GPV is the total value of all the companies held by Molten. However, the analyst pointed out that Molten’s investment strategy should provide protection against significant portfolio value decreases. “Through preferred share classes, Molten has the first call on invested capital at realisation, meaning that it does not realise all of the downside in its valuation,” added Aujla. In addition, the analyst said the broader technology sector’s recovery from its 2022 lows, as evidenced by the Nasdaq 100 index’s 42% gain this year, should boost investor confidence as it indicates a returning interest in non-profitable tech companies. Even under the most conservative scenarios, Berenberg’s analyst said Molten’s current discount isn’t justified. For example, if Molten’s portfolio experiences no growth and is valued at a 20% discount compared to its listed peers, it would still imply a 54% upside, according to Aujla. “We can even write-off the entire non-core portfolio (38% of GPV), of which we know less, and still yield 57% upside to the current share price (including a 20% liquidity discount),” the analyst said. “Nevertheless, at current levels, given the downside protection mentioned above and its track record of returns, we remain strong buyers of the stock.” Other analysts covering the stock are similarly bullish, as demonstrated by their price targets. Numis Securities expects Motlen stock to rise 204% to £7.87 over the next 12 months; Goodbody’s Gerry Nennigan sees shares rising by 215% to £8.15; and Peel Hunt has the stock at £5.43 in a year, representing a 109% upside.
