CapMan - On a healthy development track

Q3 EBIT beat, first closing of Infra fund

CapMan’s Q3 earnings beat our expectations, with EBIT at EUR 4.8m (Evli EUR 4.1m). The earnings were driven by CapMan Growth Fund’s successful exit from Fluido. Revenue in Q3 was EUR 7.2m, below our estimates of EUR 8.6m, as no major carried interest was booked. CapMan further announced the first closing of CapMan Infra’s Nordic midcap infrastructure fund, with committed funds of EUR 115m.

Showing continued healthy development

CapMan in our view is nearing a point were some of the long-term potential is starting to realize and the business is becoming healthier in terms of recurring earnings, as opposed to high quarterly variability witnessed in previous years. Management comments regarding the NRE I-fund were positive, with foreign investor interest remaining good and on-going discussions regarding properties. The BVK mandate is set to reach full utilization in 2019 along with the Infra fund expected to reach the target of raising EUR 300+m, which along with growth in other on-going newer ventures will benefit fee income. The NPI-fund saw slower growth amid internal sales focus on the Infra-Fund, with investor demand still remaining good. Although predictability of materialization of carried interest is low, we continue to see good potential for 2019.

BUY with a target price of EUR 1.75

It is worth noting that the recent stock market uncertainty, were it to increase further, would undoubtedly also affect CapMan. In our view the risks due to the PE exposure are smaller and mainly long-term, as market uncertainty could affect ability to raise funds and exit timing and valuations. We retain our BUY-rating with a target price of EUR 1.75.