If investors cast their eyes back over the last two decades, it's obvious the stock market's massive winners and 10-baggers - the likes of Amazon, Google and Afterpay - have always looked overvalued and uninvestable based on conventional valuation methods. Many investors wielding traditional valuation tools shunned these stocks and missed out on staggering returns.

When investors value established companies, it is a relatively straightforward exercise guided by market capitalisation and earnings multiples, as well as some subjective elements. But it is much more difficult to value early-stage growth companies. Investors often lack these foundations and are forced to follow a process that looks quite different.

Small cap equity investors, particularly, must frequently value less mature companies with short revenue histories, zero profit, and that require significant external capital for growth. Without years of financial data to rely on, early-stage companies and their investors must employ more creative ways to substitute these inputs.

We are in a period of unprecedented innovation and disruption globally. Exciting new companies are emerging every day. If investors can better understand how to value young, fast-growing companies, they will be much better placed to identify - and ride - the next 10-bagger.

When DCF doesn't work

For investors to grasp the challenges in valuing early-stage growth companies, they must first understand the mechanics of Discounted Cash Flow (DCF), a valuation method that all analysts are taught.

A DCF financial model projects the expected cash flows of a business into the future. Those future cash flows are then brought back to a value today by applying a discount rate to adjust for the level of risk and uncertainty faced in achieving those cash flows.

The DCF methodology is relatively easy to implement when investors value mature business that have years of consistent earnings and stable margins. But it is much harder to value a business using DCF when its earnings streams become less predictable, such as in the case of an early stage, fast-growing company. This can lead to potentially extreme mispricing of equities over time, as we have seen with the likes of Amazon, Google and Afterpay that all appeared overvalued but recorded spectacular growth.

Useless metrics

As with DCF, many of the stock standard valuation metrics such as P/E (price/earnings) or PEG (price/earnings to growth) can be completely useless when analysing immature companies.

Their P/E or PEG ratios can look astronomical, and change wildly, because their current earnings may only be a tiny sliver of their potential earnings when they mature. To achieve scale, these companies are often heavily reinvesting in themselves with high R&D costs. Revenues may grow rapidly, but it could take years to deliver profits.

Why is Afterpay's 'value' so high?

A classic example investors ask us about is Afterpay. "How can it be valued so high when it doesn't make a profit?" they ask. By "valued" we assume they mean its market capitalisation.

Our answer is simple: Afterpay's valuation, such as its P/E, is so high because it is deliberately keeping the 'E' low to non-existent by reinvesting for future growth. Given Afterpay's superior offering, and the massive size of its potential markets, we would prefer that the company reinvest and realise that potential, rather than spit out profit today.

As we say with Afterpay, and at the risk of oversimplifying, you can have revenue growth or you can have profits now, but you can't have both.

Their Australian business is highly profitable, but they are using that excess cash flow to grow and take market share in new geographies - meaning they have little to no profit at a group level. The moment they stop reinvesting for growth to prioritise generating profits, at least in the short to medium term, this would likely represent to us a signal for exiting the business.

The corporate lifecycle

To illustrate what we have been talking about, the stylised example below paints a typical picture of a corporate's lifecycle. As you can see, many early-stage growth companies simply don't have any free cash flows that are used to value the worth of a share in a DCF model. So, investors and analysts must make assumptions about what these will look like in the future.

Corporate Life and Death - a stylised lifecycle

Source: Aswath Damodaran

Turning to qualitative factors

But how do you make those assumptions?

To evaluate young, high-growth companies, analysts must dive into the underlying business, and judge how long it will take to mature. They will need to refer less to financial ratios and income statements, and more to qualitative factors such as:

• Recurring revenue
• Scalability
• Competitive advantage
• Size of addressable market
• Best-in-class leadership
• Organisational culture
• Track-record of success
• Ability to create new revenue streams

Few of these traits can be meaningfully reflected in spreadsheets.

For legendary investors, such as Peter Lynch, Warren Buffett and Howard Marks, it is the quality of a company's growth that determines its value, not revenue or even earnings growth per se. When they analyse the broad range of factors outlined above, they can make informed judgements on which businesses are most likely to be long-term successes.

Focusing on four factors

More specifically, the study of early-stage companies will focus heavily on four key factors:

1. Identifying assets

Usually, the first thing to consider when formulating a valuation for an early-stage company is the balance sheet. You list the company's assets which could include proprietary software, products, cash flow, patents, customers/users, or partnerships. Although you may not be able to precisely determine (outside cash flows) the true market value of most of these assets, this list provides a helpful guide through comparing valuations of other, similarly young businesses.

2. Defining revenue KPIs

For many young companies, revenue is initially market validation of their product or service. Sales typically aren't enough to sustain the company's growth and allow it to capture its potential market share. Therefore, in addition to (or in place of) revenue, we look to identify the key progress indicators (KPIs) that will help justify the company's valuation. Some common KPIs include user growth rate (monthly or weekly), customer success rate, referral rate, and daily usage statistics. This exercise can require creativity, especially in the start-up/tech space.

3. Reinvestment assumptions

Value-creating growth only happens when a firm generates a return on capital greater than its cost of capital on its investments. So a key element in determining the quality of growth is assessing how much the firm reinvests to generate its growth. For young companies, reinvestment assumptions are particularly critical, given they allow investors to better estimate future growth in revenues and operating margins.

4. Changing circumstances

Circumstances can move or change quickly for early-stage companies. When a young company achieves significant milestones, such as successfully launching a new product or securing a critical strategic partnership, it can reduce the risk of the business, which in turn can have a big impact on its value. Significant underperformance can also result when competitive or regulatory forces move against a company.

Landing the next 10-bagger

At Ophir, we believe that the market should award the businesses with the greatest long-term potential premium valuations.

If you avoid early stage growth businesses simply because they have high valuation multiples compared to the market (such as P/Es), you will often miss the most exciting businesses and the next '10 bagger'.

That doesn't mean you should ignore valuation measures; they are a core part of our process. You can still overpay for high growth companies.

But when you analyse high-growth early-stage companies, you need to accept that the long-term potential of a business ultimately matters more than its valuation at any given time.

There are nine million Australians using PayPal. Fund manager Insync says it's going to remain difficult for Afterpay to beat them in the local market.

Even harder to catch PayPal globally when it has 361 million active users producing 87.5% of all online buyers.

Investing isn't easy but it often begins with asking simple questions.

If I am a merchant, I might ask ...

Do I want to pay less for a 'Buy Now Pay Later (BNPL) service for my customers? (That's a no-brainer)

Do I want fraud protection, and the ability to raise invoices on the same system?

Perhaps I might need a small bridging loan and find that a bank overdraft is too costly and onerous?

PayPal can advance the cash a store needs, who then selects the set the automatic % deduction from each sale until the loan is paid back. Cheaper, faster, easier!

So the store pays less for far more, and so do their customers. There is a real win-win!

As a consumer I might consider ...

Do I also value fraud protection?

Do I value being able to link many types of payments into one easy place?

What about range of merchants available and how many I can buy from?

Do I buy just locally or a lot from overseas?

PayPal enables easy payment in just a few clicks from my credit, savings, debit or BNPL accounts in the one app. There are a few thousand merchants or from over 20 million globally for almost anything imaginable.

PayPal is the world's largest payment system with an 11% share, and Apple ranks 3rd at around 4%. The Chinese behemoth Alipay sits at just 0.97%. Afterpay? ...they're not even close to Alipay.

Scale in the payments business counts. Greater reach, lower cost and more choice to offer customers and for far less. It delivers resources to extract insights about spending patterns and assessing credit risk at levels smaller players struggle to match, thus delivering less shareholder risk and more opportunities. The growth outlook is greater when you think global and have the talent, the resources and the reach to do so.

The challenge facing a local entrant to the global game can be summed up as this: Imagine you are an existing PayPal account user. A small local merchant offers you BNPL for your next purchase. As one of the existing 9 million Australian PayPal account holders (361 million active users globally, producing 87.5% of all online buyers) you check your PayPal account and notice a new button. One click and you have BNPL without being assessed and signing-up for yet another provider. Knowing the above facts, which would you choose? Why go through even the hassle to sign up with another provider?

The local entrant relies on Late Fees for a crucial part of its revenue. It also charges more. PayPal doesn't charge Late Fees, remember it does more and on far less. To compete with this, a local competitor needs something exceptional and hard for the goliath to counter; and that can spread exceptionally fast.

John Lobb, Portfolio Manager for Insync noted "We are nowhere near the end of the exponential expansion in the payments sector, it's forecast to grow above 17% p.a. over the next 4 years alone. Covid simply gave it a big push."

He added "PayPal is not the only global company Insync invests in that is benefiting from the payment's revolution, and we are tuned in to 16 Global Megatrends like this one"

"My team identifies which firms will clearly dominate and produce superior returns for investors in each Megatrend in the long term. We have been doing this consistently now for over 11 years with exceptional results" said Joh.

We recently made a plea which fell on deaf ears - https://www.delftpartners.com/news/views/a-fictitious-memo-to-jay-powell-from-a-staffer-at-the-fed.html

Instead of some precautionary monetary tightening, for which we pleaded, we got the same monetary settings but an additional stimulative policy, aka a large pro-cyclical fiscal boost, of up to $6trillion (Yes TRILLION) some of which may go on productivity enhancing investment. The combination of fiscal and monetary stimulus in the USA is now at a level not seen since WW2.

Not surprisingly this is having inflationary consequences, and these are now getting harder to conceal from the 'great unwashed' with hedonic pricing and 'transitory' arguments. The 'geeky' should also concern themselves about how big the output gap actually is in the USA. Large output gaps tend to mean one can be relaxed about inflation in periods of easy money and loose fiscal policy and vice versa. Those in favour of this extraordinary stimulus argue the output gap is large. Recent studies from the Congressional Budget Office would indicate the opposite and that we should be concerned if we don't change course soon by tightening money. Essentially there is a lot less room to manoeuvre; time is running out if we wish to avoid inflation or stagflation.

Inflation is unlikely to be transitory and we have invested as such. Add in temporary (?) supply chain problems from Covid, permanent supply chain changes from National Industrial Policies (aka a dismantling of the global trade just in time system), and the supply side reductions caused by the "Green Revolution" and now hot weather, wet weather and not enough wet weather, and we will see the commodity complex, both hard and soft, on a strong upward trend. Wages are going up too and so we are looking at quite a well-entrenched bout of inflation and inflationary expectations. This will have consequences for companies with stretched balance sheets, and for those companies who provide goods and services with elasticity of demand and high fixed costs.

Companies can either take the inflation in input prices as a hit on margins and keep retail prices where they are, and/or they can raise retail prices and try to preserve margins. We believe that the latter is more likely. Prepare for persistent inflation. If we're wrong and it's the former, prepare for lower returns and profit growth from equities. Neither is particularly great for equity markets and the discount rates that will be applied to future earnings and dividends.

Consequently, one needs to invest now in companies with quality balance sheets, low elasticity of demand for their products, and not in danger of being targeted for regulation.

https://www.delftpartners.com/news/views/corporate-america-an-update-on-q1-results-and-beware-inflation.html

https://www.delftpartners.com/news/views/from-zirp-to-splurge.html

The Biden administration has recently introduced a potential 3rd policy tool in its attempt to generate sustainable economic growth, where sustainable means a reduction in wealth inequality, wage growth relative to profit growth, and a reduction in corporate pricing and employment power (monopolies and monopsonies). This policy tool is the use of anti-trust legislation to break up 'Big Tech' and more recently an Executive Order directed at the rail roads and has been accompanied by the appointment of Big Tech critics to the Federal Trade Commission which oversees policy toward protecting consumers. Our guess is that this is to be used as an attempt to reduce the inflationary consequences of easy money and incontinent fiscal policies.      

https://www.ftc.gov/about-ftc/what-we-do

The FTC is a bipartisan federal agency with a unique dual mission to protect consumers and promote competition.

While the USA dithers about monopoly power and is "putting out the (inflation) fire with (fiscal) gasoline", elsewhere in the world a set of policy makers is acting in a more orthodox manner by moving counter-cyclically to reduce the build-up of inflationary expectations consequences; squeeze moral hazard out of its financial system; and prevent monopoly power from building early by applying regulatory pressure. Yes, and ironically, it's the Chinese who seem to be doing what the "Imperialist Running Dogs" used to do. It is a topsy turvy world when the Chinese adopt the capitalist play book.

Namely:-

Be countercyclical in monetary and fiscal policy  -  China 1 USA 0

Let owners of the risk capital be at risk  -  China 1 USA 0

Prevent state sponsored monopolies and encourage competition such that capitalism serves the consumer   - China 1 USA 0

Some of the regulations seem somewhat draconian, capricious and counter-productive and we have been somewhat caught in our portfolios by the severity of the Chinese regulatory crackdown. We own Ali Baba and some collateral share price damage has been seen in other large Chinese dual-listed companies such as Ping An. On the other hand we are underweight Tech in our global portfolios; own none of the likely targets of the FTC in the USA and so from a portfolio perspective are underweight this risk. Additionally, and crucially, any increase in regulation is typically aimed at large companies and not smaller ones. As at end July, 6 USA stocks constituted about 25% of the market. We won't get badly hit by any USA legislation against large "Tech". Our portfolios have a substantial underweight position in the risk factor known as 'Size'. Small is (once again) beautiful?

Prepare for a more inflationary environment.

Part of your portfolio of equity risk should consequently be in infrastructure companies. Part of the proposed $3.5 trillion infrastructure package has just passed Congress. This represents additional positive news flow and a potential revenue boost for companies operating in this space. If done properly, and invested sensibly, the improved productivity should also reduce inflationary pressures in the long run.

We will shortly be running a risk-based analysis of the inflation protection properties of the listed infrastructure stock universe. There isn't a lot of long-term data on this and much of the promotion of listed infrastructure as an inflation hedge is opinion. Fair enough, and that is what we think too based on the terms under which they (are allowed to) operate, but we'll do an ex-ante risk analysis of the properties of these stocks and publish shortly.  

We would also advise investors to have a look at Asian and Japanese smaller companies. Inexpensive, improving governance, and operating in an environment of prudent macro-economic policy, we believe prospective returns look very good. We have managed a trust successfully for 4 years here and have many more years' experience than that in Asian and Japanese equity markets.

Please see https://www.delftpartners.com/pdf/DP_ASC_Factsheet_AUD_20210721.pdf for more information.

PART-II (for Part I, see Newsfeed 2-August)

Why this is an undervalued long-term winner

As we discussed in Part-I of this series, REA Group holds the most privileged position of any company in Australian real-estate.

While officially it is solely focused on helping real-estate agents do their job better, rather than replacing them in the value chain, one cannot help but be somewhat skeptical of the official narrative.

Given the natural progression of a genuine two-sided marketplace like REA Group, it is likely to continue reducing friction costs of buying, selling, and renting properties for customers and it is likely to capture a larger share of transaction economics over time. Similar to other internet enabled marketplaces that have served perform functions (e.g. Amazon, eBay, Uber, etc). 

To put some numbers around the potential opportunity for REA Group, broker commissions in Australia are currently 1.0-2.5% of the sale price of a property, while advertising costs are only 0.2-0.4%. To the extent REA Group continues to migrate towards a clearinghouse function, providing increasing value to customers, we would expect this gap to close and deliver an order of magnitude increase in the earnings potential for the business.

Additionally, COVID-19 has accelerated and reinforced the central role REA Group plays in the Australian property market and the online future of the industry by accelerating the introduction of products and services that are years ahead of their time (virtual tours, online auctions, payment on sale, etc).

Furthermore, there are 1.8 million active users logged-in to REA Group's portal which is growing rapidly, translating into significant data advantages and increasingly attachable insights on buyers, sellers, and renters.

This drives a more enjoyable and seamless property experience for customers through a virtuous loop (aka flywheel) in which REA connects consumers of property with providers of property, aggregating both supply and demand, reducing frictions, increasing choice and delivering superior value, with benefits compounding as both supply and demand scales (network effects).

REA Group's Property Flywheel

Source: REA Group

In terms of its structure, REA Group's business is segmented Residential and Commercial real-estate make up ~67% and ~15% of total revenues respectively (~82% combined), with each segment consisting of agent subscriptions (~7% of segment) and property listing fees on the platform (~93% of segment).

Additionally, with 115 million average monthly visits to its website, REA Group has a significant advertising platform along with a unique set of data insights on the property market, which it sells, these businesses are largely contained within the Media and Data segment (~10% of total revenue).

Given its unique view into the Australian property market, REA Group has started to deepen its role in transactions. To date this has largely been through the provision of Financial Services and taken the form of mortgage broking.

In fact, this focus is set to increase with the recent acquisition of leading Australian mortgage broker, Mortgage Choice for A$244mm (March 2021), this segment currently contributes ~3% of total revenues however will likely become more significant over time.

REA Group Revenues (LTM December 2020): A$810 million

Source: MGI

Finally, REA Group has several strategic interests ("real options") in some of the largest and fastest growing property markets in the world, particularly in Asia.

While the businesses within this portfolio are at an early stage, they address large populations and have significant runway, including the leading property portal in Malaysia, prominent portals in India, China, Indonesia, Hong Kong, Thailand and Singapore.

In addition to the Asian investments, REA Group owns a 20% interest in Move (realtor.com), one of the leading property portals in the United States, which rounds out a global footprint spanning three continents.

Global Footprint Spanning Three Continents

Source: REA Group

At Montaka Global we believe in owning the long-term winners in attractive markets, while they remain undervalued, we firmly believe REA Group comfortably fits within these criteria.

Montaka owns shares in REA group.

Collins St Asset Management just opened Collins St Special Situation Fund No. 1 applications. Offer to invest in a basket of global listed securities in the oil services industry. The fund is only available to new investors with a minimum investment amount of $250,000. Applications will close at midnight of 31 August, 2021.

Please click here to apply

For Formula E motorsport, the 2020-21 racing season was transformational. Seven years after electric single-seaters first raced, Formula E gained the elevated 'championship' status enjoyed by Formula 1, World Endurance, World Rally and World Rallycross.

Then came the embarrassment, the "absolute catastrophe", at the Valencia E-Prix in April. The Grande Finale turned shambolic when five appearances by the safety car forced an extra lap and the racers lacked the battery charge to compete at speed. Only nine of 24 qualifiers finished legitimately and three of these drivers crawled to the finish. Three other cars spluttered to a halt mid-last lap when they ran out of charge while five others were disqualified for exceeding energy limits to finish.

Don't be put off electric cars because an event to showcase the emissions-free driving option highlighted some of the challenges holding back the switch to green cars. In coming decades, electric vehicles are poised to become so reliable they will outsell autos propelled by fossil fuels. The race is on to switch to cars whereby an electric motor, battery and single-gear gearbox replace an internal combustion engine, radiator, fuel tank and multi-geared transmission and clutch because fossil-fuel vehicles account for about 10% of the global greenhouse-gas emissions driving climate change.

Governments worldwide are promoting or mandating the switch. Automakers have pledged at least US$300 billion to go electric and compete with Tesla Motors, the leader of companies created to build electric.

But there are issues that need solving to hasten the switch to electric. One is that batteries have power, thus distance, limits. But the improvements to batteries are expected to overcome this handicap before too long. Another is that the infrastructure to ensure country-wide charging needs to be built - it will be. Another hurdle to overcome is that while electric vehicles are simpler to make because they have fewer parts, a battery that is the size of the back seat makes the cars more expensive to produce. The 60% higher price tag on average is slowing sales even though electric car owners save money on energy costs (up to 70%) and maintenance (electric cars have only 20 moving parts compared with about 2,000 in fossil-fuel vehicles).

Another challenge is that while green cars emit no local pollution their environmental benefits come with caveats. The first is that generating the electricity they need to recharge produces emissions. But the emissions from generating electricity will fall over time as grids become more renewables based. A second qualification is that batteries make electric vehicles more emissions-intensive to manufacture. Part of the explanation for that is that the raw materials needed for battery cells, especially cobalt, lithium and rare earth elements, give off emissions during the smelting needed to extract them from ore. (Another might be that batteries are a challenge to recycle.)

The switch to electric, it needs to be acknowledged, comes with social costs. The typical electric car requires six times the mineral inputs of fossil-fuel counterparts by weight, and securing triple the number of raw materials can be problematic. A notable social cost is that more than 60% of the world's cobalt supply comes from the Democratic Republic of Congo where children become ill and die mining for US$2 a day to attain the ore - though Western companies are seeking to improve conditions. Another possible side effect is that securing the supply of key battery ingredients that are located in far fewer countries than is oil might add to tensions between the West and China.

Electric cars right now are more a luxury purchase due to their higher price. But already 30% of global sales of mopeds, scooters and motorcycles are electric because the price differential over petrol equivalents is lower. Car sales will trend the same way if the price gap to fossil power is eliminated as expected this decade as batteries become cheaper and greener grids enshrine the climate benefits of electric. Of the three touted future trends in driving - namely, car sharing that makes ownership redundant, fully autonomous driving, and electric vehicles - a world of green cars is the most believable.

To be sure, more advancements in the fuel economy of fossil fuels would sap the case for electric vehicles. A halfway switch to hybrids might slow the switch to fully electric while unexpected leaps in hydrogen power could make electric cars passé. Governments might wind back green subsidies to repair their finances (especially as some will lose revenue from fuel excise). Any delay in battery improvements would slow the switch. Banning conventional cars might misfire if the masses can't afford electric. Sales of electric vehicles could disappoint if people adopt a mentality that green cars will be cheaper and better distance-wise in a few years.

While the pace of the switch is debatable, the world of electric cars is coming. Valencia E-Prix debacles aside, the breakthrough into mainstream should prove as seamless as the switch from manual to automatic.

We have written previously about the importance of exits (link to previous article) and the important role that Private Equity managers play in generating returns through identifying the optimal path to a company sale.

The other critical role that Private Equity managers play in generating return is the provision of capital and management expertise to meaningfully help a company improve its operating performance.  The common misconception about Private Equity is that managers simply find companies with good cash flows, apply leverage to the balance sheet, significantly cut costs then pay down debt using those cash flows hence increasing the value of the business.  In the mid-market growth/buyout segment that Vantage Asset Management invests in, this misconception could not be further from the truth. For small to mid-market sized private companies, significant value can be created by leveraging the expertise provided by private equity firms. Company efficiencies are improved, growth is accelerated through customer expansion, M&A activity, managing cash, reducing costs, attracting talent and improving IT systems.

Often these businesses see private equity as a valuable way of accessing industry experts who can assist with benchmarking, entering new markets and generally providing expertise that is not readily available otherwise.  A study conducted by Adams Street Partners of the US buyout market found that the source of value creation from revenue growth through Private Equity manager intervention created 38% of the total return and multiple arbitrage (which is often a by product of revenue growth) created 33% of the return.  Leverage ranked a distant third of the return drivers.  This highlights the ability of Private Equity managers to bring meaningful value to private investments through the enhancements they make to businesses and ultimately the returns they generate for investors.

CASE STUDY: SILK LASER CLINICS

SILK was co-founded by its current CEO Martin Perelman in 2009 in Adelaide and had an initial focus on laser hair removal treatments.  The Australian non-surgical aesthetics industry is projected to generate revenues of $5.8Bn in CY2021 however it is highly fragmented with five large specialist clinic chains estimated to account for approximately 31% of the total number of clinics (as at 9 September 2020).

Advent Partners, one of Australia's leading Private Equity managers with a 35 years track record of investing in mid-market companies, first invested in SILK in January 2018. At the time the business consisted of 12 clinics primarily based in Adelaide whose revenue was mainly derived from hair removal procedures, a treatment which was experiencing margin reduction due to the procedure becoming more accessible to consumers.  At the time SILK also offered cosmetic injections, skin treatments and tattoo removal.

Subsequent to the acquisition, Advent worked with management to put a number of key initiatives in place to grow SILK including:

• Accelerating the adoption of a refined franchise model to boost the speed of network expansion into new geographical markets
• Improve clinic productivity through a focus on cosmetic injectables which attract a higher profit margin
• Nurse training and recruitment to enhance the cosmetic injectables rollout
• Adoption of data analytics to improve in-clinic financial operating performance as well as personalization of the offering
• Acquisition of rival networks of clinics
• Launch of a high-margin proprietary skincare brand Aesthetics Rx
• Introduction of body sculpting, a new technology attractive to existing SILK clients as well as attracting new clients

These initiatives saw SILK grow from 12 clinics to 56 clinics by December 2020 achieving two year compound annual growth rate (CAGR) of 79% and 414% to FY2020 in Network Cash Sales and Underlying EBITDA respectively.

During December 2020, the Advent Partners 2 Fund completed the successful exit of SILK Laser Clinics Australia via an IPO. SILK Laser Clinics Australia (ASX: SLA) listed on 15 December 2020 at a share price of $3.45, implying an enterprise value of $162 million. Upon listing Advent Partners 2 realised 50% of their original investment holding in SILK, representing 2.0x of the Fund's original investment in SILK, with the Fund retaining 28% of SILK post IPO. Once fully completed the exit will deliver Advent Partners 2 investors, including VPEG3, with top tier performing returns across a 2.9-year investment period.  Pleasingly SILK has continued to perform since listing up 40c from its listing price with FY21 prospectus forecasts recently upgraded off the back of continued operating success thanks to the initiatives that Advent Partners have helped put into place.

If you would like to share in the growth and ultimate returns derived from similar small to mid-market company investments, Vantage Private Equity Growth Fund 4 ("VPEG4") remains open until 30 September 2021.

Funds operated by this manager: 

Premium Asia Fund, Premium Asia Income Fund, Premium China Fund