AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II

IDI

CR
Bloomberg   IDIP FP
Holding Companies  /  France  Web Site   |   Investors Relation
A challenging environment for private equity after a record year
Target
Upside 65.7%
Price (€) 46.5
Market Cap (€M) 337
Benchmarks Current multiplesWeightValues (€)Upside 
NAV/SOTP per share   55%88.490%
Dividend Yield Peers 6.4% 20%93.0100%
DCF (Edit and simulate)  10%37.5-19%
P/E Peers 21.4 x 10%35.5-24%
P/Book Peers 0.6 x 5%49.87%
Target Price  100%77.066% 
Valuation matters

The basis of our valuation starts with the NAV, which is estimated as an aggregate of the individual valuation of the 16 participations (as of September 2021) in the portfolio, segmented in IDI’s two operating pillars, Private Equity Europe and Private Equity Emergents. Compared to IDI’s understandably conservative valuation, we see substantial upside potential from its diversified roster of assets, as shown by the over 50% discount to our estimated NAV.

Being a pure-play investment company with no consolidated activities outside the parent, the DCF is not particularly elucidating when it comes to valuing this type of holding company structure. As a result, the DCF solely reflects the dividend flows from investee companies, since trying to estimate cash entries from potential disposals seems too vague of an exercise given IDI’s investment profile, which is not subject to fund liquidation schedules like the majority of its private equity peers do. This was the case in 2020, where due to an unfavourable market environment brought by the COVID-19 pandemic, management held back on disposals, having just carried out the sale of HEA Expertise in April 2020 on conditions agreed before the sanitary and economic crisis (and realising a solid 35% IRR on its investment).

Regarding the peer metrics valuation, the approach is much more clear-cut. We base it on a group of family-type holding companies with a control/hands-on style in the management of the underlying assets. With many having assets in their respective portfolios that follow a service-based focus, which supports added value ambitions and recurring revenue generation, setting them apart from more commoditised and, hence, cyclical peers. The yield-based valuation jumps out, presenting a 2x upside potential, justified by IDI’s solid 5.1% dividend yield expected for FY21, compared to a modest 2.0% for its peers.

Please also read section ‘Worth Knowing’ about the impact of the SCA status on valuation

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)P/Book (x)Yield(%)
Peers ratios 24.4 0.67 2.31
IDI's ratios 21.4 0.63 6.39
Premium -33.0% 0.00% 0.00%
Default comparison based valuation (€) 35.5 49.8 93.0
Bolloré 14,150 51.40.681.24
GBL 11,605 36.00.573.94
Ackermans & van Haaren 4,487 8.531.062.25
Kinnevik Investment 3,926 30.20.550.00
Wendel 3,363 15.71.154.26
Corporacion Financiera Alba 2,583 15.50.632.26
DCF Valuation Per Share Help View DCF history
WACC % 8.38
PV of cashflow FY1-FY11 €th -164,5...
FY11CF €th -21,465
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.65
Terminal value €th -318,8...
PV terminal value €th -142,5...
PV terminal value in % of total... % 46.4
Total PV €th -307,1...
Avg net debt (cash) at book v... €th 27,994
Provisions €th 3,873
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 610,381
Minorities interests (fair value) €th 0.00
Equity value €th 271,406
Number of shares Th 7,243
Implied equity value per share 37.5
Sustainability impact on DCF % 2.97
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 30.0
Average debt maturity Year 5
Sector asset beta x 0.98
Debt beta x 0.00
Market capitalisation €th 336,785
Net debt (cash) at book value €th -7,645
Net debt (cash) at market value €th -7,645
Company debt spread bp 0.00
Marginal Company cost of debt % 3.50
Company beta (leveraged) x 0.96
Company gearing at market v... % -2.27
Company market gearing % -2.32
Required return on geared eq... % 8.30
Cost of debt % 2.45
Cost of ungeared equity % 8.38
WACC % 8.38
DCF Calculation Help
  12/21A 12/22E 12/23E 12/24E Growth 12/25E
Sales €th   5,098 5,225 5,487 5,761 2.00% 5,876   
EBITDA €th   -29,218 -29,802 -30,696 -31,310 -2.00% -30,684   
EBITDA Margin %   -573 -570 -559 -543 -522   
Change in WCR €th   4,440 10,854 919 5,183 2.00% 5,287   
Total operating cash flows (pre tax) €th   -25,879 -18,948 -29,778 -26,127 -25,398   
Corporate tax €th   -2,190 -175 -191 -224 3.00% -231   
Net tax shield €th   -144 -151 -151 -151 2.00% -154   
Capital expenditure €th   -16.0 -16.0 -16.0 -16.0 2.00% -16.3   
Capex/Sales %   -0.31 -0.31 -0.29 -0.28 -0.28   
Pre financing costs FCF (for DCF purposes) €th   -28,229 -19,290 -30,136 -26,518 -25,798   
Various add backs (incl. R&D, etc.) for DCF... €th     
Free cash flow adjusted €th   -28,229 -19,290 -30,136 -26,518 -25,798   
Discounted free cash flows €th   -28,229 -19,290 -27,805 -22,575 -20,264   
Invested capital   568 572 601 628 640   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€th)
Stake
valuation
(€th)
In currency per share
(€)
% of gross assets
Private Equity Europe 100% AlphaValue valuation 410,500 410,500 56.7 67.3%
Private Equity Emergents 100% NAV 46,600 46,600 6.43 7.63%
Other 153,300 21.2 25.1%
Total gross assets 610,400 84.3 100%
Net cash/(debt) by year end 30,177 4.17 4.94%
Commitments to pay
Commitments received
NAV/SOTP 640,577 88.4 105%
Number of shares net of treasury shares - year end (Th) 7,243
NAV/SOTP per share (€) 88.4
Current discount to NAV/SOTP (%) 47.4 View history

Changes to Story : 06/09/2022, Changes to Forecasts : 06/09/2022.