London, UK, 19 September 2019

Edison issues flash on FinLab (A7A)

Deposit Solutions, FinLab's largest fintech holding (which until recently made up nearly 30% of its NAV), has completed a new funding round with Deutsche Bank, which acquired a c 4.9% stake in the business. Although the deal volume is relatively small (and may be partially non-cash), we note that the transaction values Deposit Solutions at more than EUR1.0bn, which means it has now reached 'unicorn' status (ie a privately held company valued in excess of US$1.0bn) and has become one of the most highly valued fintech companies in Germany. We estimate that this translated into a significant write-up of FinLab's c 7% stake of over EUR40m (c EUR7.6/share).

FinLab's NAV at end-June 2019 stood at EUR20.21. Based on yesterday's closing price of EUR17.30, this implied a c 14% discount to its NAV. After accounting for the revaluation of its stake in Deposit Solutions (representing at least EUR7.6 per share) and marking to market the value of the company's only listed holding (Heliad Equity Partners), we arrive at a current NAV of EUR28.80 per share. This translates into a c 40% discount to NAV (although we note that FinLab's share price is significantly higher today).

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