Edison Investment Research Limited: Edison issues outlook on DeA Capital (DEA)

London, UK, 12 June 2018

Edison issues outlook on DeA Capital (DEA)

Over the past year, DeA Capital (DeA) has continued to make good progress in implementing the growth strategy for its alternative asset management (AAM) platform, comprising private equity, real estate and non-performing loans (NPLs). New fund launches have contributed to assets under management (AUM) growth of c 10% since end-FY16. Meanwhile, cash flow from its significant asset portfolio has remained strong, more than sufficient to fund co-investment in new fund launches, new direct investments and a continued high dividend distribution. After recent volatility in Italian markets, the yield is again more than 9% and the discount to our fair value of EUR1.72 per share is c 26%.

With the shares having adjusted for payment of the EUR0.12 per share (FY17) DPS, combined with volatility in the Italian markets, the prospective yield is again above 9% and may provide investors with an attractive entry point. The discount to the end-March 2018 (ex-dividend) NAV of EUR1.78 per share is back at c 30% and the discount to our sum-of-the-parts fair value of EUR1.72 per share is c 25%. The latter values the AAM business by reference to peer earnings multiples and adjusts the remaining Migros investment for recent weakness in Turkish markets.

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