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30% below NAV: Mountain Alliance benefits from digitalization boost

On Monday, the Nuremberg database specialist Exasol AG made a furious debut on the stock exchange. At 14 euros, the initial listing was almost 50% above the issue price of 9.50 euros. One of the beneficiaries of the successful IPO: The Munich-based investment company Mountain Alliance AG (MA, ISIN DE000A12UK08). Thanks to the high level of investor demand in the course of the IPO, the Munich company realized a partial exit from the stake acquired in 2018 – and will continue to hold a stake in Exasol.

Mountain Alliance CEO Daniel Wild sees Exasol as “an impressive proof of the success of our business model in investing in promising growth companies in the digital business at an early stage”.

“Critical size of EUR 100 million”

The associated inflow of funds in the single-digit million range gives Mountain Alliance additional scope for further expansion. A special distribution is initially rejected by CEO Wild: “In the first step, we have to reach a critical size in order to increase awareness for the Mountain Alliance on the stock exchange and for other investors. I see this critical size with a market capitalization of EUR 100 million. ”

For this purpose, incoming funds from exits, as is now happening at Exasol, are to be invested in further acquisitions and in the growth of the investments. “For us, the cash inflow from the Exasol IPO comes at a very favorable time, because the crisis also means that one or the other potential buyer will need more liquidity, which will favor a lower purchase price. With a good capital base, we are in a comfortable negotiating position. In the current year, we also want to report completion on the purchase side, ”explains Wild in an interview with Financial.de.

“The digitalization boost will benefit us”

The CEO sees the MA portfolio as being very well positioned with 33 holdings and an average holding period of around five to six years. He plans to continue investing primarily in topics such as online education, e-health and video-based work – including for home office applications in which Mountain Alliance is already represented with holdings such as Lingoda, mentavio and movingimage. “Favored by the corona pandemic, society is experiencing a major surge in digitization, which will particularly benefit our companies,” Wild is convinced.

At the end of April the investor HLEE Finance S.a.r.l. from Luxembourg joined Mountain Alliance at a rate of EUR 5.00 with around 9.8%. And company leader Wild also wants to use the price level for further share purchases, as he confirms in an interview with Financial.de: “I have always bought in over the years because I am more than convinced of the value of our portfolio. We have a portfolio that benefits from the current situation more than it suffers due to its strong focus on digital business models. ”

Analyst target price of 6.50 euros

The MA share is currently trading around 30 percent below the NAV of EUR 6.39 as of December 31, 2019. Montega Equity Research estimates the NAV at EUR 7.21 after the Exasol IPO and considers a holding discount of 10 percent to be justified. Accordingly, the analysts currently see the fair value of the MA share at EUR 6.50 – almost 45% above the current price.

Yours Christoph Martin

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