Naxs: Solid returns in eventful quarter - ABG

Strong shareholder returns in Q2
NAVPS as of 30 June was SEK 65.66, implying an increase of 4.2% q-o-q in total-return terms. Total shareholder return (TSR) amounted to 9% (SIXRX benchmark +7%), as the discount to NAV narrowed by 3pp to 16%. However, regarding the direct investments, Awilco Drilling (-18%) and Scout Gaming Group (-44%) saw declines, while Keurig Dr. Pepper gained 3%. Private equity fund investments currently comprise 58% of NAV (79% including commitments), direct investments 5%, and net cash 36%.

New board to evaluate and potentially evolve the mandate
Q2 proved to be another intense quarter from an activity standpoint. NAXS made a EUR 1m commitment to the new Nordic Capital Evo Fund I (focus on mid-caps in Northern Europe). The company also invested in another Jacktel bond. In addition, six new acquisitions were carried out by the underlying funds, and one exit was completed. Moreover, the majority owner of NAXS (QVT Financial LP), recently convened an EGM to replace the board of directors in its entirety with five new directors. The new board has the ambition to evaluate (and potentially evolve) the investment mandate of NAXS. Another ambition is to streamline the company’s structure where possible.

Valuation low vs. sector peers despite increase
NAXS currently offers exposure to 14 funds from nine different managers and seven direct investments. The discount to NAV currently stands at 13%, which is below the historical average (2010-) of 16% but still stands out as high in the investment company sector. In addition, the balance sheet is strong and we believe the dividend yield is likely to stay at around 5% over the next few years, based on today’s valuation.

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