The highly discounted shares in Molten Ventures (GROW ) have perked up after the digital venture capital fund forecast a ‘meaningful’ recovery in realisations after a two-year hiatus. 

Molten shares rallied over 6%, or 14p, to 240p yesterday after the company said in a full-year trading update that its total portfolio value at 31 March was expected to have been £1.377bn, up from £1.299bn a year ago.

However, the company guided investors to expect net asset value (NAV) excluding debt of 661p per share, a 15.2% decline over the year and a 10.1% drop in the second half.

This leaves the shares 64% below NAV, the widest discount among listed growth capital funds where the average discount is currently 38%.

Liberum analyst Shonil Chande said the NAV reduction was likely due to the highly dilutive £55m fund raise in November to pay for the all-share acquisition of Forward Partners.

After a choppy time for unlisted growth stocks, Molten chief executive Martin Davies said the underlying gross portfolio value had ‘stabilised’ in the second half, up 4.2% after a 3.7% first half decrease.

This was due to peaking interest rates and a positive contribution from Forward and also Seedcamp Fund II, an early-stage European portfolio in which the company bought a 19% stake for  €8.5m, also funded by the share issue.

Davies said the integration of Forward Partners is ongoing, and the purchase had addd a ‘balanced, well-positioned, and well-capitalised portfolio of 40-plus assets, enhancing the group’s access to early-stage deal flow opportunities’.

He said companies in the portfolio continued to ‘maintain revenue growth momentum’ which demonstrated the ‘resilience of these businesses and the structural demand for their products across their respective end markets’.

However, the portfolio did suffer from adverse currency movements that knocked £19m from NAV.

Exit opportunities

For the new financial year, Davies said the portfolio was ‘well positioned to generate returns for our investors’, thanks to its market positioning and firepower available to pick up new companies while ‘market valuations remain subdued’.

‘Full-year 2025 is showing promise of delivering a more normalised realisations market with divestment proceeds expected to be meaningfully higher than the last two years,’ he said.  

‘Our portfolio remains in good health, and we expect to see a step-up in realisations in the current financial year, with a number of potential exit processes ongoing across our portfolio,’ he said.

Liberum’s Chande said despite the fall in NAV the discount was ‘too steep’ for a fund ‘with a good long-term track record and a performing core portfolio with improving prospects for value creation via realisations’.

Launched in 2016, the company has generated an underlying total return of 63.9% over the past five years, according to Deutsche Numis data, although the shares have halved, falling 71% in the past three years.