Space, the final frontier for investors, looks like it might be about to move centre stage – with new structures emerging on a regular basis. Last week I looked at a new exchange traded fund from the HanETF team. You can read that here: https://moneyweek.com/investments/stocks-and-shares/share-tips/603343/investing-in-space-a-fund-for-the-final-frontier
If this sounds interesting you can find out more at a webinar next week. ETF Stream and HanETF have an event on Thursday 16th at 2 pm.
Here’s the blurb on the event:
This webinar will explore the megatrend behind Europe’s first space ETF, the Procure Space UCITS ETF (YODA), what space offers investors in terms of diversification and why this is one of the most exciting long-term thematic ETFs on the market.
Tom Bailey, ETFs Editor, Interactive Investor
Andrew Chanin, Co-Founder and CEO, Procure AM
Hector McNeil, Co-Founder and Co-CEO, HANetf
Elia Montanari, Head of Management and Control, European Space Agency
If you want to attend, here’s the link: https://www.brighttalk.com/webcast/18149/490091
Now the news comes today that Seraphim Space Investment Trust has announced an intention to float. There’s not a lot of details at the moment but there’s the Liberum Alternative funds team note this morning:
“The company is targeting a NAV total return of at least 20% pa from investments in an international portfolio of early and growth-stage space tech businesses. A prospectus is due to be published in the coming weeks.
The manager is Seraphim Space (Manager) LLP, an investor in the space sector since 2016. Other mandates run by the manager include Seraphim Space LP, a venture capital fund focused on new space technologies with a 31% IRR to date.
The company will acquire a seed portfolio of 19 assets from Seraphim Space LP with a total value of £96m. The seed portfolio includes an initial portfolio of 15 assets with an aggregate value of £26m. The remaining four investments are the subject of corporate activity which may have a material impact on the value of those businesses. The company intends to acquire these assets by the end of 2021 (total expected investment of £70m). The pipeline includes businesses such as Arqit (British-based quantum encryption company), Spire Global (provider of satellite based global weather forecasting, maritime and aviation predictive analytics) and AST & Science (space-based cellular broadband network aiming to provide global 4G connectivity).”
Here’s the parallel Numis summary:
“Target Returns: The company is targeting NAV total returns of at least 20% pa over the long term.
Manager: Seraphim Space is a leading global investor in the space sector since 2016, managing Seraphim Space Fund, the world’s first VC fund focused on new space technologies, which is currently demonstrating an IRR of 31%.
Seed Portfolio: There is a seed portfolio 19 assets, currently held in the Seraphim Space Fund, which will be acquired by the company, including stakes in several unicorns: Arqit (quantum encryption), Spire Global (satellite based global weather forecasting) and AST & Science (space-based cellular broadband network). The seed portfolio will be acquired for cash and existing investors in the Seraphim Space Fund will use the cash to subscribe for ordinary shares. The company will initially acquire 15 assets valued at £26.1m. The four other companies (Arqit, Iceye, D-Orbit and Spire) are currently subject to corporate activity which may have a material impact on their valuation, and will be acquired once these complete, expected to be before 31 December, for c.£70m.”
This proposed new fund launch – no amount targeted at this stage – is part of a wider trend focused on providing venture capital investments to a specialist listed investor audience. Baillie Gifford and (Merian) Chrysalis along with Draper Esprit have pioneered this trend which democratizes earlier stage investing with established, reputable players. Of course, it’s all high risk and should never comprise a large proportion of any portfolio but I think this fund launch could prove very popular.
Watch list update: Stenprop
Results out today for another of my favorite Alternative Listed funds stocks – multi-let industrial property REIT Stenprop. Here’s the summary of the final year results from Numis:
“Stenprop’s final results for the year to 31 March show an EPRA NTA of 147p per share, an increase of 6.5% from 31 March 2020 and 2.5% since 30 September. This performance was principally a result of a 6.3% like-for-like valuation increase, driven by a 10.1% like-for-like increase in the value of the multi-let industrial (MLI) portfolio (6.22% net initial yield), which now constitutes over 74% of the overall portfolio by value. Rental growth accounted for two thirds of this MLI valuation uplift, with the remainder due to yield compression. Adjusted earnings per share were 6.78p, down marginally from 6.88p in FY20, due to an increase in the bad debt provision following the impact of Covid-19 on rent collection. NAV total returns were impressive at 11.4% for the year including 6.75p of dividends paid. Strong MLI like-for-like valuation uplifts were partially offset by the impact of MLI acquisition costs, disposal costs, valuation changes on non-core property and increased bad debt provisions.”
Here’s the take on these numbers from the Numis team:
“The strong results, new dividend and total return target should be well received by the market and firmly place Stenprop as one of the most attractive real estate offerings in our peer group. The fundamentals of MLI remain compelling and we believe that Stenprop has the ability to maximise returns from the sub-sector through its unique operating platform approach. Once the transition is complete, we expect the business to continue to scale and increase efficiencies which will further boost earnings and lower costs. The shares have performed well in 2021 to date, up 21.7% on a total return basis, as the transition has been successfully executed and should continue to deliver a strong performance as management complete the final stage of the business plan. Moreover, a move to the Premium Segment of Main Market should boost liquidity in the shares and present the strong investment case to a broader potential shareholder base. Stenprop trades on a 9.5% premium to the latest NAV and yields 4.2%, which compares with a sector average premium for the Industrial peers of 11% and yield of 4.0%”.
I agree that these are more than decent numbers. My guess is that we won’t see the premium won’t increase by much more than a few per cent from the current level but if the UK industrial economy does aggressively rebound in the next year then Stenprop seems ideally positioned plus you get that decent yield of 4%.