Berenberg reiterates 'buy' rating on Molten Ventures

Berenberg stated that in order to assess if Molten's 60% share price decline year-to-date was justified, it felt it had to value the entirety of the company's portfolio and stress-test it under different scenarios.

"While we reduce our price target slightly, we still think there is significant upside to the share price," said Berenberg, which stood by its 'buy' rating on the stock.

The German bank said despite "a significant fall in multiples" over the past three months, as long as Molten's portfolio companies grow at the rate it forecasts, the company's net asset value per share could reach 1,078.0p by the end of the 2023 trading year - higher than current estimates of 1,050.0p.

"While this might sound ambitious, to justify the current share price (c400p) we have to assume Molten's portfolio companies deliver just 10% growth and sales multiples track to 3.7x. This implies a 55% discount to trading NAV per share or a c62% discount to forward NAV. With Molten never trading beneath a 20% discount on dates in which it has reported and other listed venture capital/private equity (VC/PE) companies such as 3i never trading beneath a 36% discount in their history, we believe the current stock price is due a significant relief rally," said the analysts.

"Our fear is that public market investors do not see this in time and that Molten’s portfolio could be acquired. With PE companies such as Carlyle acquiring large, undervalued VC companies with significant AUM (ie the $2.0bn Abingworth deal), we would not rule out Molten being a takeover target if the shares remain at these levels."

Reporting by Iain Gilbert at Sharecast.com