Berenberg initiates coverage on Draper Esprit at 'buy'

Berenberg said Draper Esprit was "one of the most active venture capital firms in Europe", investing exclusively in European technology companies.

With a typical equity stake in its portfolio companies of less than 10%, though, the analysts stated that Draper did not operate these businesses nor consolidate their financials.

As a result, the German bank said the group's most important KPI was the net asset value of its investments and, with a steady rise in the metric, many investors were "understandably" looking for evidence of valuations.

"Both comparable multiples and Draper's historical returns indicate there is significant upside to not only the current share price, but also the company's reported NAV," said the analysts, which issued the firm with a 680.0p target price.

Berenberg highlighted that Draper has generated an average multiple on its investment of roughly 2.9x since 2016. This, however, rises to 4.0x for its larger investments, namely those companies that have received funds of more than £3m.

We, therefore, believe the core portfolio could be worth more than £800.0m alone if its return on investment multiple holds firm," said Berenberg.

"The time value of money must be taken into consideration here, but, even so, the company's portfolio valuation is still highly conservative."