SP Angel has rated Tekcapital shares a ‘buy’, highlighting a potential 60% upside from the current share price.
The broker has released an update note on Tekcapital following a substantial increase in the company’s portfolio value during 2024.
Tekcapital’s portfolio grew by 38% year-on-year to reach $64.2 million on an unaudited basis, driven by robust performance across its portfolio of technology companies.
The research note emphasises a significant transformation in Tekcapital’s portfolio structure, with four of its five portfolio companies now being publicly listed, representing approximately 68% of the portfolio value. Successful IPOs of both Microsalt and GenIP were key drivers of the increase in the portfolio value, with MicroSalt trading roughly double its listing price.
SP Angel notes that this concentrated portfolio approach has enabled Tekcapital to maintain low operating expenses and run its operations efficiently.
SP Angel identifies a potentially significant catalyst in the proposed Nasdaq listing of Guident Corp, Tekcapital’s remaining unlisted investment. Guident, in which Tekcapital holds a 70% stake, operates in the rapidly expanding autonomous vehicle market that is gathering momentum amid a flurry of IPOs and wider adoption of the technology.
The analysts point to recent successful listings in this sector, citing WeRide Inc.’s share price doubling post-IPO as an indicator of strong market appetite.
SP Angel notes Guident’s strong position in the safe teleoperation of autonomous vehicles, highlighting that remote monitoring and control systems have now become mandatory in ten US states. Currently valued at $18 million in Tekcapital’s portfolio, the analysts suggest that a successful IPO could unlock significant additional value for shareholders.
On valuation, SP Angel calculates that Tekcapital’s equity and convertible loan note investments are worth approximately £45 million, translating to an asset value per share of around 24 pence. This indicates that the shares are currently trading at a substantial discount of over 55% to net asset value.
The analysts suggest a target price of 16 pence, representing a 60% upside from current levels, based on bringing the discount more in line with the investment company sector average of 35%.