AlsterResearch AG Initiation: SGT German Private Equity - New business modell

SGT German Private Equity (Initiation)   Finanical Services MCap EUR 100m BUY PT EUR 3.40 (+109% potential)   Through a merger with SGT capital, the former German Startups Group has made a remarkable transition from a VC-like business model to an asset manager of institutional money in private equity. The related stable and predictable earnings are not yet reflected in valuation.   Read

What’s it all about?

We are initiating coverage of SGT German Private Equity (SGF) with a BUY recommendation and a PT of EUR 3.40. The company, formerly known as German Startup Group, not only changed its name but also its business model - from being a venture capital asset owner to a manager of institutional money in private equity. The latter comes with the positive effect of stable and predictable sales and earnings with underlying assets under management (AuMs) being the main driver of future business success. That said, SGF is currently in the process of raising between USD 1.0-3.5bn (hard cap) in capital for the new SGT Capital Fund II. We therefore believe that once the new business model is fully implemented, SGF should be valued based on prospective earnings rather than a discount/premium to NAV