NAXS - Flat NAV while valuation rose to historical avg.
Q4 outperformance driven by lower NAV discount DPS below ABGSCe but yield remains attractive Relative valuation in line with historical average Total shareholder return of 8% in Q4 NAVPS as of 31 December was SEK 60. 87, implying an increase of 0. 5% q-o-q. Meanwhile, total shareholder return was +8%, as the discount to NAV decreased by 6pp to 18%.
The DPS of SEK 3. 00 was below our estimate of SEK 3. 25, but still implies a dividend yield of 6%.
Regarding the direct investments, Awilco Drilling gained 76% after a long period of weakness, while Scout Gaming Group retreated by 21% after an impressive YTD development. Keurig Dr Pepper was up 17%. Private equity fund investments currently comprise 63% of NAV (82% including commitments), direct investments 5%, and net cash 32%.
A high level of activity In Q4, NAXS made an investment commitment to a newly established fund, Equip Fund I, which invests in small- and mid-sized companies in Norway and Sweden. It also signed an agreement to co-invest with JAB Holding in Pret Panera Company. Moreover, NAXS sold shares in Scout Gaming Group and received additional shares in Keurig Dr Pepper.
Eight new holdings were added to the underlying funds. Regarding market activity, NAXS states that it saw an increased transaction level in H2 compared to the low level in H1. The main focus for the funds has been to develop the underlying companies and mitigate the negative effects from the pandemic.
Room to manoeuver NAXS currently offers exposure to 13 funds from nine different managers and four direct investments. The discount to NAV is presently 17%, in line with the historical average (2010-). The balance sheet remains strong and the dividend yield is likely to stay at around 6% over the next few years, based on today’s valuation.
At this point, we think the company should look more intensely at new investments, while maintaining a high dividend yield. Additional buybacks are also an option (the board has proposed that the mand.
